Post demonetisation, Noida-based digital payments giant Paytm has not only seen a high surge in the number of users or transactions but also its valuation. This has helped its employees earn massive paychecks, while also adding value to their stock holdings. As per the report from ETTech, such employees have cashed out on the opportunity and sold shares worth over Rs 100 crore.
Around 47 Paytm employees have sold their shares of One97 Communications, the parent company of Paytm to several internal and external buyers. However, the company has declined to specify the name of the buyers. A company’s representative said:
The company has over 500 employees who hold close to 4% shares in the parent company.
It seems that the investors, as well as the founder of the company, are now seeking to get hold of a larger chunk of Paytm shares after it managed to gain momentum post the government’s move to scrap high currency notes. Further, the government’s efforts for a digital economy and cash-less transactions has also given a boost to the company.
This deal also helps Alibaba and its payments affiliate Ant Financial, which currently holds over 45% stake in One97 Communications, to consolidate their shareholding in the company. These two entities of Alibaba Group, along with early investor SAIF Partners and founder Vijay Shekhar Sharma — now own about 95% stake in the company.
Recently, the Chinese e-commerce giant invested $250 million in One97 earlier this month in order to buy out the shares of early investors Reliance Capital, Saama Capital, and SAP Ventures. With the sale, Anil Ambani-led Reliance Capital made an estimated 27-fold return on investment, while Saama Capital exited at 52 times the original value in dollar terms.
The news about employee share sale at such high valuation comes at a time when most of the Indian “unicorn” startups are seeing valuation markdowns and are under pressure to raise a down-round. In contrast, the sale of ESOPs by Paytm employees is driven by rising investor interest in the company.
Over the past two years, Paytm has seen close to 100 employees exercising this option to sell their shares, even though the company remains private. Last year, several Paytm executives sold part of their ESOPs to the company’s external board members like former Google and Uber executive Amit Singhal, WhatsApp’s Neeraj Arora, and Ruchi Sanghvi.
In November 2015, Flipkart had sold between Rs 180 crore and Rs 240 crore in its employee trust fund to high net-worth individuals to provide liquidity for its employees. ESOPs are an avenue for companies to hire and retain critical talent but options to cash out are very limited.
