The $700 million one-time cash payout by Flipkart is expected to benefit at least 25,000 current and former employees and its subsidiaries Myntra and PhonePe, reported Moneycontrol.
The payment is part of PhonePe’s complete separation from Amazon. According to the report, this is one of the largest wealth creation opportunities in the country to date in the private sector.
This comes at a time when the heydays of funding and fat pay raises have given way to sobriety and a reality check as investors became more wary.
The development will benefit former and current employees of PhonePe, Myntra, and Flipkart, the report quoted sources as saying.
Nearly 25,000 of Flipkart’s former and present employees who hold employee stock options will reportedly receive a one-time discretionary cash payout of up to $700 million, the company announced last week. The top 20 Flipkart employees, who were among the company’s first and most experienced hires, will receive up to $200 million of the $700 million payout.
Flipkart’s one-time cash payout, however, differs from a typical equity/ESOP (employee stock option plan) buyback as employees are not selling their options back to the company; rather, they are receiving the payout as part of the PhonePe transaction.
Flipkart announced the completion of the ownership separation of PhonePe, a payments and financial services unicorn acquired by the e-commerce giant in 2015. To unlock value, Flipkart spun off PhonePe as a separate entity in 2020.
However, Flipkart kept a sizeable stake in the unicorn fintech company. On December 23, Flipkart announced that it had sold all its shares in PhonePe to existing shareholders.
The effective markup of PhonePe comes just days before its largest-ever fundraise from General Atlantic, which would make it the most valuable fintech in the nation.
Prior to announcing its intention to conduct an initial public offering (IPO) in India, PhonePe relocated its registered entity from Singapore to India. Contrary to this, Flipkart and the majority of consumer internet companies have a foreign domicile for tax reasons.