Zerodha, the discount brokerage firm has planned to buy back employee stock ownership plans by spending Rs 60 to 65 crore, this year, at a self-assessed enterprise value of Rs 7,000 crore or close to $1 billion. Zerodha has never taken over any external capital so far and this will be the first-ever attribution of valuation to it.
The company said, “The buyback is intended to provide senior management and long-term staffers with liquidity options as Zerodha celebrates its 10th anniversary later this year”.
It added, “Zerodha created an Esop pool of around Rs 200 crore last year and will permit employees to sell 5-50 per cent of the 33 per cent of their shares that will vest this year. The number of shares an employee can sell will be based on performance”.
Zerodha’s CEO, Nithin Kamath said, “The buyback is being done at more than four times its book value, or Rs 700 per share, and is expected to benefit around 700 employees. It will, however, be concentrated among 30-40 of them”.
He added, “It’s been a decade since we started, and we have not raised any capital and don’t have any intention to raise for the next few years. So, we thought this was a good time to give liquidity to people who have been around with us for a while”.
He also said that the company’s valuation estimate of $1 billion is fair and conservative.
New user signups at Zerodha have increased during the past three months as a result of market volatility.