Swiggy, Meesho announce ESOP buybacks

Food delivery unicorn Swiggy on Tuesday said it has unveiled a share buyback programme for its employees to vest their employee stock ownership plan (ESOP) shares.

While the Bengaluru-based startup did not confirm the buyback size, a person familiar with the matter told TechCircle it was worth $7-9 million.

“Over 40% of our employees with ESOP benefits -- current and those we had to unfortunately part ways with earlier this year -- will be eligible to exercise their stocks. Some of them will be able to liquidate their ESOPs at as much as 3x premium of the allotted price,” Girish Menon, vice president of HR at Swiggy, said in an emailed statement.

The share buyback, Menon said, will see participation from the family offices of industrial houses in India as well as some individuals. The reported development is the second such liquidity programme at Swiggy -- the previous one was executed in June 2018.

Separately, another Bengaluru-based startup made a similar announcement. Fashnear Technologies, the holding company of social commerce app Meesho, said it will buy back ESOP shares from its employees, at a size of about $5 million.

The second buyback at the company is applicable to employees ranging from junior executives to senior leadership, as per a statement.

“This venture is driven by a sense of entrepreneurship and responsible ownership on the part of each employee of the company, hence, with this second buyback we want to acknowledge their continued efforts and reward them for their contribution in building Meesho,”  Meesho founder and CEO Vidit Aatrey said in a statement.

Explained: Why has Covid-19 made ESOPs popular?

Both startups have been in the news for laying off a significant number of people in 2020, owing to a depleted revenues caused by the Coronavirus-led dip in demand for their services during the nationwide lockdowns. The food delivery industry, Swiggy said at the time, has only recovered to about 50% of its peak.

In April, Meesho terminated several people from its 700-800 workforce, while Swiggy cut jobs in two installments -- it laid off 1,100 staffers in May and another 350 in July.

In Tuesday’s statement, Meesho said it has now grown about four times compared to pre-Covid levels, with over 7 million entrepreneurs on its platform.