BackBharatPe plans scheme to enrol merchant partners as investors
BharatPe will be rolling out this programme to its more than 7.5 million existing merchant partners and will also extend it to new merchants who will join the platform
PremiumBENGALURU : BharatPe plans to make its merchant partners stakeholders in the company with the start of a $100 million Merchant Shareholding Programme (MSP) to encourage and reward loyalty among its merchants ahead of a planned public listing in about three years.
The merchant payments and financial services company will roll out the incentive to its more than 7.5 million existing merchant partners. The programme will also be offered to new merchants joining the platform, according to a company statement issued on Thursday.
BharatPe’s strategy is to create an equity pool structure worth as much as $100 million to be allotted to eligible merchants over the next four years. The company believes its MSP pool will be valued at nearly $1 billion by the time it goes public.
In an August interview, BharatPe co-founder and managing director Ashneer Grover said the company is planning a public listing by 2024. In addition, the company is also looking to double its merchant base to 14 million by March 2023.
While offline retailers are a key contributor to the growth of several fintech firms, including global companies, there isn’t any scheme currently that empowers their partners to create wealth for themselves.
The stock programme is designed to address the gap in wealth creation for merchants and recognize them as active growth partners, BharatPe said, adding that the programme aims to build and sustain loyalty among its merchant partners in a fast-growing fintech segment in India.
“While we as a startup community celebrate the coming of age with multi-billion dollar IPOs (initial public offerings), there is resentment brewing elsewhere. Millions of consumers and merchants are feeling left out of the digital and startup value creation in India. The folks who contribute to monthly active users, the revenue of startups and valuations don’t get any equity upside or even allocation in IPOs. We will change it at BharatPe by making our merchants part equity owners and giving them the IPO upside through the first of its kind programme in the world," Grover said.
Earlier this year, BharatPe tripled its valuation to $2.85 billion after a $370 million fundraise in a primary and secondary mix led by new investor New York-based Tiger Global Management.
“The Merchant Shareholding Programme is the first-of-its-kind initiative designed to create wealth for our loyal merchant partners who intend to be with us for the long haul," said Sumeet Singh, general counsel and head-corporate affairs and corporate strategy, BharatPe.
To be sure, BharatPe’s model is not entirely unique. Edtech unicorn Unacademy, for instance, said earlier this year that it would offer stock options to its teachers. It has earmarked stock options worth $40 million to be issued to teacher partners over the next few years. Other startups are expected to follow suit to ensure that merchants do not abandon their platforms.
BharatPe’s key business verticals include its merchant payments business, financing and financial services offerings to merchant partners. This year, it has diversified into peer-to-peer lending, buy now pay later credit, and loyalty solutions for customers. The company is currently present in 140 towns and cities across India, which it plans to augment to 300 locations over the next two years.
As of August, BharatPe has disbursed nearly $300 million in financing to merchant partners with an outstanding loan book of $100 million. More than $10 billion in annual payment value is being processed on the BharatPe platform.
Meanwhile, in June, the Reserve Bank of India approved the takeover of Punjab and Maharashtra Co-operative (PMC) Bank by a joint consortium of Centrum and BharatPe. Unity Small Finance Bank Ltd, promoted by Centrum Financial Services Ltd and Resilient Innovations Pvt. Ltd, parent of BharatPe commenced operations last week.
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