After Walmart paid out hundreds of millions of dollars to past and present Flipkart employees late last month, wealth management advisers and financial services startups have seen a spike in activity as the beneficiaries of the Walmart buyout seek to diversify their new wealth. The top beneficiaries of the Flipkart-Walmart deal are, however, mostly planning to use their new wealth to invest in startups, venture capital funds and buy luxury products and real estate, according to 10 current and former Flipkart employees Mint spoke with.
In May, Walmart agreed to buy a 77 percent stake in online retailer Flipkart for USD 16 billion, the biggest-ever deal in India’s startup ecosystem. As part of the deal, Walmart was to pay roughly USD 800 million towards employee stock option plans (ESOPs) in tranches, a chunk of which was paid out in late October to employees of Flipkart and its units, Myntra and PhonePe.
Apart from being the largest-ever deal for Indian startups, Walmart- Flipkart share buyback is the biggest wealth creation event in Bengaluru after the historic listing of software giant Infosys Ltd in the late 1990s.
“Largely, there are three buckets where Flipkart people are spending,” said Ankit Nagori, CureFit co-founder and former Flipkart chief business officer. “One is on buying cars and bikes and similar luxury items. Secondly, a bunch of people are investing in mutual funds and other investment vehicles. And third, the top earners will invest in startups and become LPs (limited partners) in venture funds.”
Grow, an investment platform started by former Flipkart employees, launched an investment product with the title “Better Than FD (fixed deposit) For ESOP and Bonus Money” on the day Walmart paid out cash to Flipkart employees, chief executive Lalit Keshre said. Already, more than 250 people had invested in the product, said Keshre, a former senior product executive at Flipkart.
Another personal finance and wealth management platform, Upwardly, which was started by former Myntra executive Prateek Mehta has seen a few hundred Flipkart employees approach it for investment advice over the last month.
Some Flipkart employees who received their ESOP payouts are spending money on more glamorous things than mutual funds.
At least a dozen employees have booked new apartments in high-rises coming up in Bengaluru’s startup belt of Koramangala, HSR and Sarjapur. Several of the employees that Mint spoke with said they had started planning vacations abroad, among other things.
“The ones who have had significant payouts, they are looking at angel investment or portfolio management,” a Flipkart employee said. “IIFL and other wealth management guys have been making a beehive for senior management at Flipkart, Myntra and PhonePe to manage their wealth. They (employees who received the least) are spending on paying off home loans or buying their first home.”
Among Flipkart employees, the biggest payout of the Flipkart-Walmart deal went to Flipkart co-founder and former executive chairman Sachin Bansal, who already has big plans to invest his wealth. Mint reported earlier this month that Bansal is in talks to invest in start-ups including Ola and Ather Energy.
The other top earners from the Walmart deal include Flipkart co-founder and chairman Binny Bansal, Flipkart CEO Kalyan Krishnamurthy, Udaan co-founder Sujeet Kumar, CureFit founders Nagori and Mukesh Bansal, education non-profit Udhyam.org founder Mekin Maheshwari, PhonePe founders Sameer Nigam and Rahul Chari.
Like Sachin Bansal, many of these super-rich are likely to pour money back into the startup ecosystem, either by buying stakes in startups or by investing in venture capital funds. Some of them, including Binny Bansal, Krishnamurthy, Kumar and Nagori, are already prolific startup investors. — Livemint