StartupTalky

Tag: Swiggy ESoPs

  • 1.28 Cr Shares Are Allotted by Swiggy Under the ESOP Scheme

    The board of Swiggy, a well-known foodtech company, has authorised the distribution of 1.28 Cr equity shares through its employee stock option plan (ESOP). The Nomination and Remuneration Committee authorised the distribution of 12,896,462 equity shares under the Swiggy Employee Stock Option Plan 2024 to its qualified workers, according to the company’s regulatory filing dated April 21. The face value of the shares is INR 1, and the exercise price for the shares that were allotted was also INR 1 per share. Swiggy recently made an expansion investment of INR 1,000 crore in Scootsy Logistics, a subsidiary. In the prior quarter, 42% of Swiggy’s total revenue came from Scootsy Logistics. Swiggy has not yet submitted its Q4 FY25 financial statements for the final quarter of the previous fiscal year. The company reported a 31% year-over-year increase to INR 3,993 crore in Q3 FY25 from INR 3,049 crore in Q3 FY24. Swiggy’s losses increased 39.2% to INR 799 crore during the same time period as a result of its growth-orientated strategy.

    In Jan, Swiggy Allocated 2.61 Crore Shares to Employees

    On January 23, Swiggy said that 2.61 crore shares had been distributed under various employee stock ownership plan (ESOP) schemes. Under the Swiggy ESOP Plan 2015 & Swiggy ESOP Plan 2021, Swiggy announced that it had authorised the distribution of 2,61,93,411 equity shares of the company in response to eligible workers exercising their stock options. According to the document, this raised Swiggy’s paid-up equity share capital from INR 2.23 crore to INR 2.26 crore.

    Esop allocation, which was first popularised by IT services giants like Infosys, is particularly common in consumer online businesses. Before going public, these companies usually provide founders and top management more stock options as incentives. However, there may be a number of unintended consequences from the opportunity to create wealth for a larger group of workers.

    More firms are now offering ESOPs to all employees, not only senior management, according to a survey done by Saison Capital, XA Network, and Carta. Compared to one in four in 2021, one in three firms now provide these plans to all employees.

    Furthermore, the median ESOP pool size grew from 9% in 2021 to 12.6% in 2024, and 90% of founders now talk about ESOPs with candidates during interviews or job offers, up from 75% in 2021. Additionally, the reasons for providing ESOPs have changed; in 2024, 40% of founders cited cost reductions, up from 28% in 2021.

  • With Swiggy’s IPO, 5,000 Employees will have Access to INR 9,000 Core in Esop

    On November 13, 2024, Swiggy went public on the NSE at a price of INR 420, 7.69% higher than its IPO price of INR 390. At INR 412 on the BSE, it made its debut at a premium of 5.64%.

    According to various published reports, the company’s listing is set to open up employee stock option plans worth INR 9,000 crore and propel the meal delivery company’s approximately 500 employees into the “crorepati” league. One of the biggest wealth-creation initiatives in India’s startup sector is expected to benefit 5,000 present and past employees of the Bengaluru-based company.

    At a price of INR 390 per share, the highest price range of its initial public offering (IPO), which opened for subscriptions on November 6, Swiggy’s whole Esop pool is estimated to be INR 9,000 crore. Through the buyback of Esops in July of this year, the company has already provided its employees with cash totalling more than INR 500 crore.

    Exemption from Lock-In

    Swiggy obtained a one-year lock-in period exemption from the Securities and Exchange Board of India (Sebi) in July of this year. This exemption would also enable Swiggy’s employees to sell shares one month following the initial public offering (IPO), increasing their opportunities to build wealth. Over the years, e-commerce giant Flipkart, one of the largest wealth producers in the online economy, has carried out $1.5 billion in Esop buybacks in multiple tranches.

    With its INR 9,375 crore IPO in July 2021, Swiggy’s fiercest rival Zomato, one of the first major domestic consumer internet businesses to go public, created 18 millionaires. About 350 employees, both current and past, became crorepatis at the time of Paytm’s first public offering (IPO) in November 2021. The main factor driving the 3.59 subscriptions to Swiggy’s public offering was institutional investors’ interest. For the IPO, the company had specified a price range of INR 371-390 per share.

    Consumer internet companies are particularly affected by the Esop allocation tendency, which was first made well-known by IT services giants like Infosys. Before going public, these companies usually provide founders and top management with more stock options as incentives. However, as Swiggy has shown, the chance to create income for a larger group of workers can have a number of unintended consequences. Many of the recently graduated “crorepatis” frequently decide to launch their businesses alone. Spending on assets like real estate has also increased.

    According to media reports, Swiggy has teamed up with several platforms to finance its employees’ conversion from Esop to stock; this is especially true since they will need to pay taxes before the stocks can be sold on the open market. Employee taxes will be charged to the difference between Swiggy’s current share price and the price at which the Esops were given at the conversion of the Esops.

    Bengaluru Court Restricts Swiggy Over Ex-Employee’s ESOP Rights
    A Bengaluru court has barred Swiggy from alienating a terminated executive’s ESOP, emphasizing employee rights in equity compensation.
    StartupTalkyNitin Konde