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

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

Employee stock options are a type of benefit granted by companies. They give employees the right to buy shares in the company at a certain price for a limited period of time. Mobikwik said in a press release that its Esop program was designed to “attract, retain and reward high-income employees in a competitive talent market.”

The Gurgaon-based fintech startup said 20% of its grants came around the time it submitted its draft Red Hering Prospectus (DRHP) in July. The company plans to raise 1,900 billion rupees ($ 255 million) on its IPO, slated later this year.

According to its DRHP, Mobikwik intends to raise Rs 1,500 crore through a primary stock sale. The rest will be a secondary transaction where existing investors will sell part of their shares. Investors in the 11-year-old startup include Sequoia Capital India, Bajaj Finance, American Express, Cisco and the Abu Dhabi Investment Authority.

According to Mobikwik, its last fundraiser in July, which received it from the Abu Dhabi Investment Authority (ADIA) at $ 20 million at a valuation of Rs 895.80 per share, saw its employees’ stock options increase six times on average. The round valued Mobikwik at $ 720 million. The company could consider a $ 1 billion valuation for its IPO, sources previously told ET.

Based on the new assessment, Mobikwik claims that seven of its employees have stock options worth more than Rs.10 billion and 31 have more than Rs.1 billion each. It is also said that 118 employees, or a quarter of the total, saw their stock options exceed Rs 10 lakh.

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“Over the past decade, Mobikwik has grown into a leading fintech player in India thanks to the strength of its people,” said Upasana Taku, Chair, Co-Founder and Chief Operating Officer of Mobikwik. “While we continue to consolidate our presence and leadership, we want to recognize and reward our employees for their commitment.”

The 12-year-old startup is among a growing list of consumer internet companies including CarTrade, Paytm, Nykaa, and Policybazaar that have their eyes on stock market debuts this year. Bajaj Finance owns 13.8% while Sequoia Capital India owns 17.2% 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 particularly popular with new age companies, who use them to attract and retain talent. Over the past 12 to 18 months, the demand for employee stock options has grown in line with startup valuations, with record sums being pumped into the ecosystem.

Top tier startups like Paytm, PhonePe, Udaan, Razorpay, Cred, Acko, Zerodha and Ola have granted stock options to their employees. ET reported in July that a number of startups had cumulatively repurchased nearly $ 546 million worth of shares from employees over the past year.

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