Bengaluru: Singapore-based Temasek Holdings Pvt Ltd has bought shares worth at least $30 million from former and early employees of cab-hailing service Ola (ANI Technologies Pvt Ltd), as part of a secondary share sale, four people aware of the transaction said.
Temasek bought the shares at a valuation of between $2.5-3 billion, the people mentioned above said, requesting anonymity.
The secondary transaction, which was completed around May-end, has allowed for a large-scale Esop (employee stock ownership plan) encashment for former and early employees of Ola, which was launched in 2011 by Bhavish Aggarwal and Ankit Bhati.
The Esop encashment at Ola comes at a time when former and current employees at cross-town Internet start-up Flipkart are also set for massive Esop payouts, after Walmart’s $16 billion deal to buy out 77% of the online retailer is completed.
Bengaluru-based Ola is also in talks with Temasek to raise funds in a separate deal, which will be a combination of primary and secondary capital. As part of that deal, Temasek is expected to purchase about $150-200 million of secondary shares in Ola, thus handing out significant exits to some of Ola’s earliest investors, according to two people aware of the talks. The Times of India had first reported about the $200 million secondary sale in March, while The Economic Times reported Ola’s talks with Temasek to raise fresh capital.
Last year, Ola raised $1 billion, mostly from SoftBank and Tencent. It has raised roughly $2.5 billion in funds since starting out in 2011 and is India’s third-most valuable internet start-up after Flipkart Ltd and Paytm (One97 Communications Ltd).
Ola declined to comment for this story. Mint could not immediately ascertain how many Esop buybacks Ola has executed since it started out in 2011.
An Esop is a benefit plan intended to encourage employees to acquire shares or ownership in the company. Start-up employees typically get lower salaries than those at large companies, but are attracted to these ventures partly because of the possibility of profiting handsomely through stock options if there’s an acquisition or an initial public offering.
In May, Flipkart told its 30,000-odd employees that they would be able to cash their vested stock options at $125-129 per share after Walmart completed its $16 billion acquisition.
The Esop payout at Ola is expected to be a windfall for a handful of Ola’s employees, although not in the same scale as the payouts at Flipkart. The Esop payout by Walmart is expected be the biggest-ever in the Indian start-up world and is expected to be a massive gain for a few hundred Flipkart employees.
Ola’s latest Esop payout is part of a recent trend of handsome payouts for former and current employees in the Indian start-up ecosystem.
At TaxiForSure and FreeCharge, both current and former employees were allowed to cash out their vested stocks in full. Taxi-hailing app TaxiForSure was sold to Ola for $200 million in March 2015, while payments company FreeCharge was bought by online marketplace Snapdeal for $400 million in April 2015.