Around $700 million cash payout in store for Flipkart employees as PhonePe hives off from e-tailer

“This payout represents the value of the PhonePe holding within those Flipkart options…. This payout will present an event for wealth creation for our employees, which has been a continued commitment for Flipkart, and one that we will remain focused on,” Krishnamurthy wrote in his note to the current company staff.

“It is truly a testimony to the hard work of thousands of Flipkart and PhonePe employees. Eligible employees will receive additional information and details on this payout shortly,” he said.

ET has seen the copy of the email.

The new share price of Flipkart has been determined at $165.83 per option (previously $189.1), excluding the value of PhonePe. The payout to employees will, however, be at $43.67 per option, reflecting the increase in the market valuation of PhonePe, Krishnamurthy said.

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ETtech

ET was the first to report on November 29 that
Flipkart was planning an Employee stock ownership plan (ESOP) buyback of $700 million in what would be the largest share buyback in the Indian startup ecosystem. The Esop buyback being facilitated will be applicable for current and former employees.
The Esop buyback is part of PhonePe’s ongoing funding round of anywhere between $1.5-2 billion. Walmart, the US retailing behemoth is likely to lead the financing round while private equity fund General Atlantic will also participate infusing primary capital of about $300-400 million, with the rest constituting a secondary share sale. In a secondary share sale, money doesn’t go to company coffers and instead it goes to investors who are buying shares from other investors or the staff selling their options.

Walmart owns more than 70% in Flipkart and is expected to have a similar shareholding in PhonePe as well.

Krishnamurthy told Flipkart employees that “there is no change in the management structure at Flipkart with this (PhonePe separation) development.”