Leading Indian e-commerce giant Flipkart completed a $100-million (nearly Rs 650 crore at current exchange rates) Employee Stock Options Plan, making it one among the largest share repurchase programmes by a privately held company. More than 3,000 past and present employees of the Flipkart Group, including Myntra, Jabong and PhonePe, participated in the buyback programme, the company said in a statement yesterday. This is Flipkart’s fourth buyback in the last five years where ESOP holders sold part of their vested stock options.
“This ESOP repurchase programme is a token of thanks for the dedication and hard work they (employees) have put in over the years. We’re delighted to be setting the benchmark on this important parameter, not only in the startup industry but the wider Indian private sector as well,” Flipkart co-founders Sachin Bansal (also Chairman of Flipkart) and Binny Bansal (Group CEO) said.
In August this year, Flipkart had said that the company has raised “significant” investments in the form of a mix of primary and secondary capital from the Japanese investor Softbank’s Vision Fund, taking its cash reserves to over $4 billion. “This is the biggest ever private investment in an Indian technology company, and will make the (Softbank) Vision Fund one of the largest shareholders in Flipkart,” the company had said in a statement.
“We’re excited to welcome the Vision Fund as a long-term partner as we continue to build our business with a focus on serving the needs of all Indians, and driving the next phase of technology adoption in India,” Binny Bansal and Sachin Bansal, Co-Founders of Flipkart, said in the statement.
Earlier this year, Paytm and logistics venture Blackbuck had executed similar buybacks from their staff. Notably, Paytm’s buyback was worth Rs 100 crore, which saw nearly 50 employees to selling stake to both internal and external buyers.
In November this year, Mutual fund investor Valic Co. trimmed the valuation of Flipkart to $7.9 billion. Notably, the latest valuation is way below the $11.6 billion valuation at which Flipkart raised funds earlier this year. In the previous quarter, Valic had valued Flipkart at roughly $8.5 billion.
Many top market experts including Rakesh Jhunjhunwala have pointed out the excessive valuations that a few players in the online space command. “I will consider buying Flipkart’s stake if it is valued at $100 million,” Rakesh Jhunjhunwala had quipped during his address in Retail Leadership Summit held last year.