Leading food delivery platform Swiggy announced its fifth employee stock options (ESOPs) liquidity program on Monday (15 July, 2024) valued at $65 million.

This initiative is designed to retain talent and build loyalty among employees as Swiggy faces challenges in the market and prepares for its upcoming public listing.

The Economic Times quoted Girish Menon, Swiggy’s Head of HR saying that their priority has always been to reward their employees by providing wealth-creation opportunities.

Advertisement

Around 2,000 employees across various roles will have the option to cash in their ESOPs. This secondary transaction, valued at over $9 billion, is expected to attract additional investors as more employees participate.

In secondary transactions, shareholders sell their stakes to existing or new investors without adding new capital to the company. These transactions are usually priced lower than primary shares.

This ESOP plan aligns with Swiggy’s plans for an initial public offering (IPO), anticipated later this year or early next year.

The company has already received shareholder approval for the IPO, which is expected to include Rs 3,750 crore ($450 million) in fresh equity and an offer for sale (OFS) of shares worth Rs 6,664 crore ($800 million) by existing shareholders.

Major investors like Prosus, holding a 33% stake in Swiggy, and SoftBank are expected to sell their shares in the OFS. Other notable shareholders include Accel, Elevation Capital, Meituan, Tencent, Norwest Venture Partners, DST Global, Coatue, Invesco, and GIC.

Swiggy last raised about $700 million in January 2022, led by Invesco, which subsequently reduced the company’s valuation. As of January 2024, Swiggy was valued at $12.7 billion.

Also Read: From Paytm to Adani Power, Over 1,000 Stocks Out of NSE Collateral List from August 1 

Despite facing challenges from taxes, Swiggy continues to offer ESOP cashouts. While shareholders in publicly traded companies are taxed on their gains from selling shares, employees are taxed when they receive their ESOPs.

ESOP grants are typically structured to vest gradually. For example, if an employee is granted 100 ESOPs, 25 may vest each year. As the ESOPs vest, employees can choose to convert their options into shares at a predetermined exercise price. This price is usually lower than the actual share price.

Want to learn the art and science of managing your money? The 1% Club can help. Details here