Flipkart will buy back employee stock options worth about $700 million from employees as a part of its move to separate full ownership of payments and financial services unicorn PhonePe, as the e-commerce giant looks to hire and retain talent at a time when most startups in the country are undertaking layoffs due to the ongoing funding winter.
"We are pleased to announce that employees, who are holders of Flipkart ESOPs (employee stock option plan), will receive a one-time discretionary cash payout as part of the transaction. This payout represents the value of the PhonePe holding within those Flipkart options," Kalyan Krishnamurthy, CEO of Flipkart, told employees in an internal mail. Moneycontrol reviewed a copy of the mail.
"The new share price of Flipkart has been determined at $165.83 per option (previously $189.1), excluding the value of PhonePe. The payout to employees will, however, be at US$43.67 per option, reflecting the increase in the market valuation of PhonePe," Krishnamurthy added.
While Krishnamurthy did not mention the full value of the buyback, a person close to the development told Moneycontrol that it will be worth $700 million. He also said that the employees who would be eligible for the buyback would be receiving additional information and details on this payout shortly. The number of employees who would benefit from the payout remains unclear. Flipkart did not comment on the story.
Earlier in the day, Flipkart said that it has completed full ownership separation of PhonePe, ahead of the fintech unicorn's multi-million dollar fundraise, which would be its largest.
Flipkart hived off PhonePe as a separate entity in December 2020. Back then, PhonePe raised $700 million from a clutch of investors, including Walmart at a valuation of $5.5 billion.
Moneycontrol reported in October that PhonePe would be raising a new round led by General Atlantic at a valuation of $12 billion, which would make it the most-valued fintech unicorn in India.
In the same month, PhonePe moved its registered entity from Singapore to India ahead of its plans to launch an IPO in the country. This is contrary to most consumer internet companies, including Flipkart, having an overseas domicile, for tax benefits.
In an interview for CNN News18’s Bits to Billions in June, PhonePe co-founder and CEO Sameer Nigam revealed that the company is in the process of moving its registered entity from Singapore to India. He had said that the board had already signed off on the plan and the completion of the process was only a matter of time.
