Tiger Global and Accel Partners-backed Zinka Logistics Pvt. Ltd, which operates online marketplace for logistics BlackBuck, has bought back shares from employees.
Two-year-old BlackBuck has around 1,000 employees and 15% of them are covered under the Employee Stock Option Plan (ESOP). Of the 150 employees who can avail of ESOP, 35 have opted for the share sale, the company said. However, it did not disclose the total worth of the shares repurchased.
“The buyback provided 11 times returns within the one-year time window, for employees who exercised this option,†the firm said. “The entire process has been completed and the payment has been made to those who opted for the buy-back plan,†it said.
BlackBuck is one of the fast-growing startups. In two years, it raised $100 million from investors—including Tiger Global, Accel Partners, IFC, Yuri Milner’s Apoletto Fund and Flipkart—which explains the 11-fold rise in stock value.
The company said it repurchased stock at market price—the price at which the investors value it. Co-founder Rajesh Yabaji told VCCircle in March that the company is nearing profitability.
Recently, Flipkart group CEO Binny Bansal joined the board of.
Startups typically use ESOPs as a means to attract top talent. In many cases, ESOPs constitute as much as 70% of the senior executives’ compensation package. Companies such as Flipkart and InMobi are known for solid ESOP distribution practice. Flipkart reportedly earmarked $100 million for share buyback from employees under which around 6,000 employees are covered.
The heavier ESOP component ties employees’ financial future to the startup’s fortune. It can sometimes become unpredictable as in the case of Snapdeal where a few hundreds of former and existing senior executives saw the worth of the stock options they held eroding as the company went through a period of turmoil.
BlackBuck said stock options account for more than the cash component in its compensation structure. “The company started with a large ESOP pool at the time of incorporation and continues its commitment to award its people with more options as the firm scales into the next orbit,†it said.
Started in 2015 as an online B2B marketplace for logistics transactions, BlackBuck brings truckers and customers on a platform to execute the transaction using intelligent auction engines offered by smart mobile interfaces. The company claims to have around 125,000 trucks on its platform, operating in over 300 locations, and 400 customers including large corporations like Coca-Cola, ITC and HUL.