Swiggy, a popular food delivery service and rival to Zomato made its stock market debut on November 13. Shares were listed at ₹420 on the National Stock Exchange (NSE), which is 7.7% higher than the issue price of ₹390. On the Bombay Stock Exchange (BSE), Swiggy’s shares started at ₹412, up 5.64% from the IPO price. This listing will also add significant value through employee stock option plans (ESOPs).
According to Swiggy’s Draft Red Herring Prospectus (DRHP), as of September 2024, there are 231 million outstanding ESOPs valued at ₹9,046.65 crore, based on the upper price band of ₹390 per share. This will likely make nearly 500 Swiggy employees millionaires, marking a significant financial milestone for the company. These employees are part of a larger group of around 5,000 who will benefit from the ESOP payout, as reported by the Economic Times.
The report mentioned that e-commerce giant Flipkart has conducted ESOP buybacks worth $1.5 billion over the years, making it one of the biggest wealth creators in the internet economy. Meanwhile, Swiggy’s rival, Zomato, went public in July 2021 and created 18-dollar millionaires through its ₹9,375 crore IPO. During Paytm’s IPO in November 2021, around 350 employees became millionaires.
Swiggy’s DRHP report showed three ESOP plans: Swiggy Employee Stock Option Plan 2015, Swiggy Employee Stock Option Plan 2021, and Swiggy Employee Stock Option Plan 2024.
Additionally, Swiggy got an exemption from the Securities and Exchange Board of India (SEBI) in July, allowing employees to sell shares one month after the IPO instead of the usual one-year lock-in period. This should increase their wealth-creation opportunities.
However, the exercise of ESOPs will increase the number of shares available, potentially reducing the value of existing shareholders’ stakes and affecting Swiggy’s share price.