Razorpay announces $10-million ESOP buyback

Payments firm Razorpay said on March 4 its investors were buying back $10 million worth of shares from current and former employees, which promises to be a windfall for about 750 people.

Sequoia Capital and sovereign wealth fund GIC are the investors buying back the Employee Stock Option Plans (ESOPs). Those who hold vested stocks can sell up to 33 percent of their shares. Razorpay employees across functions—from team leaders to support and administrative staff—stand to gain from this move.

“We’ve always said and believed that our employees are the reason for every success that we have had. They turned an unprecedented year into one of the strongest years for Razorpay," Razorpay co-founder and CEO Harshil Mathur said.

Also read: Razorpay in talks with GIC for $150-200 million investment at valuation of $2 billion: Report

The buyback was the company’s way of giving back to the employees for their contribution and a form of wealth creation for all to ensure that the employees, too, grow with the company, Mathur said.

This is Razorpay's third such exercise in as many years. In November 2018 and November 2019, 140 and 400 employees, respectively, were eligible to exercise this option.

For years, ESOPs have been a rare source of wealth-creation at startups due to lack of exits but over the last 18 months, many firms have been gone for buybacks, rewarding reward employee loyalty. These include Unacademy, Zerodha, Cars24 and Urban Company.

"Our current and former employees, even as young as 23, will be eligible for this incentive, irrespective of ranks,” Mathur said.

The compensation would be rolled out to all employees—software engineers, product managers, customer experience agents and administrative staff, he added.

Razorpay became a unicorn in October 2020, valued at a billion dollars when it raised $100 million from Sequoia, Tiger Global, GIC and others.