The call for buying back shares came soon after Flipkart raised $2.5 billion from Japanese investor Softbank in August which had agreed to buy shares from existing investors in the company. Late last month, Softbank had reached out to other investors in Flipkart to buy their stock at a valuation of $9-10 billion.
Softbank has committed to invest $1.2-1.4 billion in purchasing shares in Flipkart on the secondary market, people in the know have told Business Standard. Apart from employees, investors such as Tiger Global and Accel Partners are expected to cash in, as Softbank looks to increase its shareholding in India’s only competitor to US online retail giant Amazon.
Flipkart would buy back shares at a cost of $85.2 per share with a transaction fee of around $3-4 according to news
reports in October. Current employees would be able to sell up to 25 percent of their stock options while former employees would be allowed to liquidate only 10 percent of their holdings.
Flipkart says the share buybacks are a way for it to share some of its success with employees. It has wanted to be seen as a company that goes out of its ways to protect employee interests. In April, after the company raised $1.4 billion from Tencent, eBay and Microsoft at a valuation of $11.6 billion (down from a peak of 15.2 billion), Flipkart said it would compensate all eligible employees with additional shares to make up the difference.
"It is not common practice to shield employees from a funding round that values a company lower than it was valued at earlier. That privilege is usually reserved for investors,” Sachin Bansal and Binny Bansal had said in a joint statement at the time.
Flipkart disbursed over $100 million to buyback stock options from current and former employees
The decision to buyback shares was taken soon after SoftBank invested $2.5 billion in Flipkart
SoftBank has committed to invest $1.2-1.4 billion in buying shares from existing investors & employees
In April, Flipkart employees were given “differential ESOPs” to compensate for the company’s drop in valuation
Flipkart says the share buybacks are a way for it to share some of its success with employees