Swiggy Allocates $271 Million in ESOPs to Top Executives Ahead of $1.25 Billion IPO
- ByStartupStory | October 9, 2024
Food and grocery delivery giant Swiggy is set to launch its highly anticipated initial public offering (IPO), and in a significant move, the company has earmarked a substantial $271 million in employee stock options (ESOPs) for its founders and senior executives. This decision highlights Swiggy’s commitment to rewarding its leadership team as they prepare to enter the public market, as detailed in its pre-listing prospectus.
The majority of the ESOPs—nearly $200 million—has been awarded to Sriharsha Majety, Swiggy’s founder and group chief executive officer (CEO). Other notable recipients include co-founders Nandan Reddy and Phani Kishan Addepalli, chief financial officer (CFO) Rahul Bothra, chief technology officer (CTO) Madhusudhan Rao, food marketplace CEO Rohit Kapoor, and Amitesh Jha, the newly appointed CEO of Swiggy’s quick commerce arm, Instamart.
Under the ESOP 2024 scheme, Majety, who currently holds a 6.23 percent stake in the company on a fully diluted basis, is poised to increase his holding by an additional 2.2 to 2.5 percent. He also plans to sell shares worth $7.5 million through the IPO’s offer for sale (OFS) component. In secondary share sales from July to September, Majety and Reddy offloaded shares worth $23 million and $12 million, respectively. This trend reflects a broader movement among internet startups, where founders and senior leaders often experience significant dilution of their stakes through successive fundraising rounds and are incentivized through ESOPs ahead of an IPO.
Newly appointed CEO Amitesh Jha, who joined Swiggy in September from Flipkart, was granted options worth $13.3 million. Rohit Kapoor, who has been with Swiggy since August 2022, received $9.8 million in stock options. Meanwhile, former chief growth and marketing officer Ashwath Swaminathan, who stepped down at the end of September, was awarded $5.7 million in stock options under the same plan.
The ESOP grants come with a vesting period ranging from one to eight years, indicating that the actual value of these stock awards will depend on Swiggy’s performance post-IPO. Any fluctuations in Swiggy’s stock price following the listing could significantly impact the valuation of these stock rewards.
Swiggy’s anticipated $1.25 billion IPO is one of the most awaited public listings in India’s startup ecosystem. The company initially filed its regulatory documents with the Securities and Exchange Board of India (Sebi) in April through a confidential filing. In September, Swiggy submitted an updated draft prospectus after receiving approval from Sebi. The fresh issue component of the offering, initially pegged at $450 million, could be increased to $600 million, depending on market conditions.
In addition to Majety and Reddy, Swiggy’s key investors, including its largest shareholder Prosus, Norwest Venture Partners, Elevation Capital, Accel, Coatue, and Alpha Wave Global, are expected to participate in the OFS.
Swiggy’s compensation plan aligns with similar strategies employed by other high-profile tech companies before their public listings. In 2021, Zomato, Swiggy’s chief rival, granted ESOPs worth $376 million to its founder and CEO, Deepinder Goyal, ahead of its IPO. As of June 2023, Goyal held a 4.2 percent stake in Zomato valued at over $1.2 billion. Likewise, Paytm’s parent company, One 97 Communications, awarded stock options to its founder and CEO, Vijay Shekhar Sharma, in 2021 ahead of its IPO, although those grants later faced scrutiny from Sebi. Other tech startups, including Freshworks, Delhivery, and PB Fintech, have also offered stock-based awards to their top management and founders prior to their respective IPOs.
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