Swiggy, the popular food delivery service, is set to make waves in the financial world with its highly anticipated Initial Public Offering (IPO), unlocking an estimated ₹9,000 crore worth of employee stock option plans (ESOPs). This IPO, set to list on Wednesday, November 13, is expected to turn approximately 500 Swiggy employees into 'crorepatis' (millionaires), as reported. The ESOP pool has made Swiggy's IPO one of the most awaited events in the Indian tech sector, promising substantial financial gains for its workforce.
Employee Stock Option Plans, or ESOPs, are a means of rewarding and incentivizing employees by offering them the option to acquire company shares. These options give employees an opportunity to hold shares, which they can choose to sell or retain, depending on their financial goals. In some cases, ESOPs are structured as a mix of salary and shares, allowing employees to build wealth as the company's valuation increases.
How do ESOPs Work?
An ESOP is essentially a contract granting employees the option to purchase shares of the company after a specified period at a predetermined price. This arrangement encourages employees to align their goals with the company's performance, as the value of their shares increases with the company’s success, thereby motivating them to contribute to its growth.
Swiggy has allocated an impressive ESOP pool worth ₹9,000 crore, priced at ₹390 per share, which is also the IPO’s upper price band. This pool is projected to benefit around 5,000 current and former Swiggy employees, especially those who have served the company during its growth trajectory.
Unlike the usual one-year lock-in period post-IPO, Swiggy employees will be able to sell their shares just one month after the listing. This is due to a special exemption Swiggy received from the Securities and Exchange Board of India (Sebi), facilitating liquidity for employees sooner than is typical.
Swiggy's entry into the IPO market follows similar moves by its competitor Zomato, which made headlines in July 2021 with its ₹9,375 crore IPO, creating 18 dollar millionaires among its employees. In the tech sector, Swiggy’s offering of ₹11,300 crore has become the largest IPO since Paytm’s historic public listing in 2021. Swiggy's IPO was oversubscribed by 3.59 times, largely driven by institutional investor interest, indicating the market’s confidence in Swiggy's growth potential.
Swiggy’s ESOP buyback and wealth creation mirror the success of other Indian tech giants. Flipkart, for example, has conducted multiple ESOP buybacks over the years, totaling a massive $1.5 billion. Similarly, Paytm’s IPO in November 2021 created 359 crorepatis. Swiggy initially launched its ESOP programs in 2015, followed by successive programs in 2021 and 2024. To date, the company has allocated nearly 230 million shares across these ESOP programs, with about 9 million shares having been exercised.
According to reports, the top leadership and founders of Swiggy hold ESOPs collectively valued at ₹2,600 crore. This group includes Swiggy’s founder and CEO Sriharsha Majety, co-founders Nandan Reddy and Phani Kishan Addepalli, as well as key members of the executive team such as CFO Rahul Bothra, CTO Madhusudhan Rao, Swiggy’s food marketplace CEO Rohit Kapoor, and Instamart CEO Amitesh Jha. This high-value ESOP allocation reflects the pivotal role these leaders have played in Swiggy's evolution from a food delivery start-up to a household name in Indian tech.
Swiggy’s IPO not only highlights the company’s market growth but also demonstrates its commitment to rewarding the talent that fueled its rise. By unlocking significant financial benefits through an expansive ESOP pool, Swiggy stands as an example of how tech companies can foster wealth creation for employees. With its entry into the public markets, Swiggy is poised to establish a precedent for future tech IPOs, while giving its workforce a chance to directly benefit from the company’s success.