India’s second largest startup, Paytm completed stock sales worth INR 500 crore and more than 100 former employees and current employees have become rupee millionaires. It includes INR 300 crore from the secondary sale of shares that valued Paytm at $10 billion. It is the second sale of Esop by the company after the INR 200 crore cash out by staff in mid-2017.
About 20-25 people made more than INR 6-7 crores in the latest sale which was aimed at rewarding the staff at Paytm. The millionaires include the chief executive of Canada’s Paytm, Harinder Takhar who cashed out more than INR 40 crore. As part of the rupee millionaires there was an office boy who made more than INR 20 lakh in the sale.
The recent valuation of Paytm is $3 billion higher than what it was valued at in March 2017. This has also given an opportunity to the existing and former employees to liquidate their vested Esop units to generate wealth. Current investors of the company include SoftBank, Alibaba Group Holding Ltd, SAIF Partners and Ant Financial Service Group.
The Esop pool of the company is not restricted to the top or middle level executives but office staff and employees who have been around since the early days. There are other 100-150 employees who are dollar millionaires on paper. A financial instrument, Esop allows employees to own shares that they can sell for cash after a particular period of time. Flipkart completed a $100 million repurchase of Esops in December 2017 which was the largest ever share buyback program in the history of India’s startup ecosystem. More than 3000 employees participated in the share repurchase. It has completed four buybacks until now but none on the scale of the December buyback.
Esops are an important part of the compensation offered at startups and it is very common for employees to accept pay cuts and make Esops a large part of their overall compensation. These sales will help start up Esops recover credibility in the industry.