Employees currently working with Flipkart may reportedly be allowed to liquidate only 50% of their vested Esops during the first year.

100 Flipkart employees to turn millionaires post Walmart deal but heres the catch
Atom Flipkart Friday, May 11, 2018 - 12:22

One of the biggest beneficiaries of the Walmart-Flipkart deal have been its employees with Flipkart setting aside $500 million for liquidation of employee stocks as part of the deal.

ET reported on Thursday that with the valuation of Flipkart rising to nearly $21 billion post the deal, the total worth of the ecommerce major’s employee stock ownership plans rose to $2 billion. This also includes unvested shares.

The ESOPS held by nearly 100 -- both former and current – employees of Flipkart are now reportedly worth over $1 million.

However, while it was reported that Walmart will offer a 100% buyback of vested shares by Flipkart employees, ET reported on Friday that the option of cashing out seems to have a catch to it.

According to the report, employees currently working with the online retailer may only be allowed to liquidate 50% of their vested Esops during the first year and can cash out 25% each in the second and third year.

For former employees, they will only be able to cash out 30% of their vested stock options. They would have to wait it out till the company goes public.

This has left employees disappointed as this was the best time for them to liquidate their Esops fully, given that this could be the peak in terms of the value of Flipkart at least for the next couple of years.

However, there is no official communication from the company yet.

After Walmart bought a controlling stake in Flipkart, the deal has led to several parties making money.

Co-founder Sachin Bansal, who is now exiting the ecommerce major is selling his complete 5.5% stake in the company for nearly $1 billion. Co-founder Binny Bansal too, will be selling a part of his stake but will continue to stay on at the company.

Also read: ‘He pushed everyone to think big’: Binny Bansal pens farewell note to co-founder Sachin

Naspers, which invested $600 million over several rounds since 2012 has made $2.2 billion after selling its entire stake in the company.

SoftBank too, which owns nearly 20% in Flipkart is expected to make $4 billion, which is nearly twice of what it invested less than a year ago.

Flipkart last organized a large-scale Esop purchase in Ocotber 2017, where its bought back stock options where current employees could sell 25% of their vested options, while former employees could sell only 10%.

Also read: Walmart investors unhappy with Flipkart buyout, shares plunge 4 per cent

 

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