Swiggy’s IPO Success Turns Employees into Millionaires Through ESOPs

Swiggy, the popular food delivery aggregator, recently made headlines with its successful Initial Public Offering (IPO), which took place on Wednesday. The much-anticipated IPO saw Swiggy’s shares debut at Rs 420 on the National Stock Exchange (NSE), a 7.7% premium over

the IPO price of Rs 390. The stock opened at Rs 412 on the Bombay Stock Exchange (BSE), reflecting a 5.64% gain from the issue price.

But the exciting news doesn’t end there. Through its Employee Stock Ownership Plan (ESOP), Swiggy is set to turn nearly 500 of its employees into millionaires. The ESOP scheme, which allows employees to acquire ownership in their company via stock, is expected to bring substantial wealth to those who have been part of Swiggy’s growth journey.

What is an ESOP?

An Employee Stock Ownership Plan (ESOP) is a program that gives employees the option to purchase company shares, often at a price lower than the market value. The idea behind this is to create a sense of ownership and incentivize employees to work towards the company’s success. By offering shares at a discounted price, companies like Swiggy encourage long-term commitment and loyalty from their staff.

Typically, employees have to go through a vesting period, which means they need to wait for a specified period before they can exercise their stock options. The vesting period often depends on factors like tenure and performance. Once the vesting period is over, employees can purchase the shares at the pre-determined price and potentially sell them at the market value, benefiting from the price difference.

How Swiggy’s ESOPs Are Making Employees Wealthy

According to Swiggy’s Draft Red Herring Prospectus (DRHP), the company has issued 231 million outstanding ESOPsas of September 2024. These stock options are valued at Rs 9,046.65 crore, based on the upper IPO price of Rs 390 per share. This has created a significant opportunity for employees to benefit financially from the company’s success.

As a result, nearly 500 employees are set to become crorepatis—a term used to describe individuals with a net worth of more than one crore (Rs 10 million). For these employees, the value of their ESOP holdings, after the successful IPO, is now worth several crores. In total, around 5,000 employees stand to benefit from the ESOP payouts, with many seeing their financial futures significantly brightened by Swiggy’s market debut.

Swiggy’s Stock Performance Post-IPO

Since the IPO, Swiggy’s stock has experienced fluctuations but remains strong. As of the latest update, Swiggy’s share price is Rs 436.70, reflecting a decline of -4.23% on the day. Despite this, the stock has maintained a solid performance, staying within a day range of Rs 427.35 to Rs 489.40.

For employees who participated in the ESOP, the initial rise in stock price from Rs 390 to Rs 420 during the debut offers them significant potential gains.

The Future of ESOPs and Employee Wealth

Swiggy’s IPO highlights the powerful role that ESOPs can play in wealth creation for employees. By allowing them to share in the company’s success, ESOPs foster a stronger sense of ownership and loyalty. For many of Swiggy’s employees, their hard work and commitment to the company are now paying off, as they transition into the ranks of the financially affluent.

As more companies go public, ESOPs are becoming an increasingly important way for employees to benefit from the growth and success of the organizations they work for. For Swiggy, this IPO not only signifies a major milestone in its corporate journey but also marks a moment of financial success for its dedicated employees.