IPO-bound Mobikwik reserves 7% of its equity for employee stock options

Mobikwik said on Tuesday that it has reserved 4.5 million shares or 7% of its equity for its employee stock option plans (Esop) for its impending public listing.

Employee stock options are a type of benefit granted by companies. They give employees the right to buy the company’s stock at a specified price for a finite period of time. Mobikwik said in a press statement that its Esop programme is meant to “attract, retain and reward deserving employees in a competitive talent market”.

The Gurgaon-based fintech startup said that 20% of its grants happened around the time it
filed its draft red herring prospectus (DRHP) in July. The firm plans to raise Rs 1,900 crore ($255 million) in its IPO, scheduled for later this year.

According to its DRHP, Mobikwik aims to raise Rs 1,500 crore through a primary share sale. The remaining will be a secondary transaction in which existing investors will sell portions of their stakes. The 11-year old startup counts Sequoia Capital India, Bajaj Finance, American Express, Cisco and Abu Dhabi Investment Authority among its investors.

According to Mobikwik, its last fundraise in July in which it
got $20 million from Abu Dhabi Investment Authority (ADIA) at a valuation of Rs 895.80 a share, saw a six-fold jump on average for stock options held by its employees. The round valued Mobikwik at $720 million. For its IPO, the firm could be eyeing a valuation of $1 billion, sources previously told ET.

Based on the new valuation, Mobikwik claims that seven of its employees have stock options worth more than Rs 10 crore, and 31 have more than Rs 1 crore each. It also said that 118 employees, or one-fourth of the total, have seen their stock options cross Rs 10 lakh in value.

“Over the past decade, Mobikwik has grown on the strength of its employees to become a leading fintech player in India,” said Upasana Taku, chairperson, cofounder and chief operating officer, Mobikwik. “As we cement our presence and leadership further, we want to acknowledge and reward our employees for their efforts.”

The 12-year-old startup is among a growing list of consumer internet firms, including CarTrade, Paytm, Nykaa and Policybazaar, that are eyeing stock market debuts this year. Bajaj Finance owns 13.8%, while Sequoia Capital India has a 17.2% stake in Mobikwik. Bennett, Coleman and Company Ltd has a 1.08% stake in the startup. BCCL is the parent company of The Times of India Group, which also publishes The Economic Times.

Stock options are especially popular with new-age companies, which use them to attract and retain talent. Over the past 12-18 months, demand for employee stock options has risen in tandem with the valuations of startups, with record sums being pumped into the ecosystem.

Top-tier startups such as
Zerodha and
Ola have all given stock options to employees. ET reported in July that a host of startups had
cumulatively bought back shares worth almost $546 million from employees in the past year.


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