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Flipkart’s $700 million one-time cash payout will benefit at least 25,000 past and present company employees, making it one of the biggest wealth reaction instances in the Indian startup ecosystem, a report by Moneycontrol said.
Investors of Flipkart, including Walmart, will pay for the cash payout and benefit past and present employees of Flipkart, Myntra and PhonePe.
This cash payout is different from a typical equity or ESOP buyback as here, they are not selling any options but getting money as a part of the company’s move to separate PhonePe. The company announced the payout on December 23.
“We are pleased to announce that employees, who are holders of Flipkart ESOPs (employee stock option plans), 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, as reported by Moneycontrol.
The share price of Flipkart was determined at $165.83, excluding PhonePe. However, the payout will be $43.67 per option. This shows that the company’s valuation has nearly doubled since its acquisition.
Earlier this week, Flipkart said it had completed the separation of PhonePe, which it acquired in 2015.
PhonePe has recently moved its registered office from Singapore to India and is looking to launch an IPO in the country.
However, the plan comes at a difficult time in the markets. PhonePe’s closest competitor, Paytm, has seen a 75 per cent drop in its valuation since its listing in November 2021.
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