 "Swiggy")
Delivery start-up Swiggy is set to buy back shares worth $50 million from 2,000 staffers, which were issued to them as part of the employee stock option plan (Esop).
The buyback comes at a time when several new-age companies have been forced to lay off tens of thousands of employees to conserve cash and extend their cash runways, according to a report in the Moneycontrol.
Earlier this month, Flipkart paid a total of $700 million to about 19,000 Flipkart employees following the company’s split from PhonePe.
The Esop liquidation exercise was part of Swiggy’s announcement in 2021, where the company had said that its employees would be rewarded for their performance in 2022 and 2023.
Since 2018, Swiggy has bought back Esops four times with the size increasing each year.
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According to reports, the Bengaluru-based start-up bought back shares worth $4 million in 2018, then spent $9 million in 2020. After two years, Swiggy bought back shares worth $23 million in 2022, and now it will be paying $50 million to 2,000 employees which represents less than half of its overall strength of just over 5,000, according to the Moneycontrol report.
Girish Menon, head of HR at Swiggy, said, "Our team is Swiggy's most valuable asset and we are happy that macroeconomic conditions notwithstanding, we're able to keep our commitment of sharing Swiggy's success and growth through these wealth creation opportunities."
According to Moneycontrol, Swiggy's valuation is now similar to Zomato, which had a market capitalisation of $8.7 billion on July 24. This was despite Swiggy being valued at $10.7 billion during its last fundraiser in January 2022.
Sriharsha Majety, chief executive officer (CEO) and co-founder, said that the company’s core business — food delivery — had turned adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) positive (excluding Esop costs) as of March 2023, while other verticals such as Dineout, and Instamart had been showing improvement in financial health too.
