Scores of employees have reaped a bonanza by selling shares in One97 Communications, which owns digital payments provider Paytm, as investors and founders increase their stake in the Alibaba-backed company, which has recorded a steep surge in valuation as the Indian government seeks to transform the country into a cashless economy.
In the last few weeks, about 47 employees at the Noida-based company — valued at $4.8 billion last year — have sold shares worth about Rs 100 crore to both internal and external buyers, according to company executives who declined to specify the names of the buyers.
“The company has over 500 employees who hold close to 4% shares in the parent company,” said a company representative.
The deal also helps Alibaba and its payments affiliate Ant Financial, which currently holds about 45% stake in One97 Communications, to consolidate their shareholding in the company.
These two entities along with early investor SAIF Partners and founder Vijay Shekhar Sharma — who also owns a licence to set up a payments bank — now own about 95% stake in the company.
The Chinese e-commerce group invested $250 million in One97 earlier this month buying out the shares of early investors Reliance Capital, Saama Capital and SAP Ventures.
While the Anil Ambani-led Reliance Capital made an estimated 27-fold return on investment in rupee terms, Saama Capital exited at 52 times in dollar terms.
The windfall for employees and investors in Paytm comes at a time when most Indian consumer Internet unicorns – a term for privately held billion-dollar valuation companies – are under pressure to agree to a dip in valuations in return for fresh capital. Both online marketplaces Flipkart and Snapdeal are currently in talks with investors.
In contrast, the sale of employee stock options (esops) by Paytm employees is driven by rising investor interest in the company, which was among the biggest beneficiaries of the demonetisation of high-currency notes by the government last November.
Last year, several Paytm executives sold part of their esops to the company’s external board members like former Google and Uber executive Amit Singhal, WhatsApp’s Neeraj Arora, and Ruchi Sanghvi, Facebook’s first woman engineer.
Over the past two years, the company has seen close to a 100 employees exercising this option to sell their shares, even though the company remains private. So far, the company has raised Rs 543 crore from One97 and Sharma.
Experts tracking the space feel that such events typically happen when demand for shares in company outstrips supply.