Zerodha, an online stockbroking platform has announced that it will repurchase employee stock options (ESOPs) worth Rs 65 crore from approximately 700 of its employees. The deal is finalized at Rs 700 per share bringing the valuation of the company to Rs 7000 crore.
The firm had assigned its ESOPs worth Rs 200 crore to its 850 employees around September in 2019. Nithin Kamath, CEO of Zerodha stated that this buyback will majorly benefit about 30-40 ESOP holders. The shares will be bought at 4X the book value, amounting to Rs 170 per share.
Zerodha has decided that the number of shares that will be bought back per employee will be based on their performance. Zerodha’s buyback program will allow 5-50% of options vesting this year. Zerodha is the biggest share brokerage firm in India in terms of active clients and through this program, they will reward 700 of their employees.
The development comes at a time when the firm has recorded an upsurge on its platform in the last three months of lockdown as more retail investors moved into investment in the share market due to high volatility. On the contrary volatile markets attract increased numbers for share traders who want to either earn via trading shares or invest in companies that are undervalued.
The firm has gained around 300K users in March and 200K user per month in subsequent months. The almost-a-decade old company has not raised any funds until the date so no fair market valuation of the company has been done. It has survived on its own operational cash flows since its inception. Zerodha offers retail and institutional broking, currencies, commodities trading, bonds, and mutual funds investments.
Startups like Oyo, Unacademy, Swiggy, Meesho, CarDekho and Byju’s have also taken up this method of rebuying ESOPs in past to reward their employees.