Firstcry, Ola Electric IPOs to build a club of super-rich

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The top 10 executives of Bhavish Aggarwal-led e-scooter manufacturer Ola Electric are sitting on a potential cash value of 16,792 crore, of which Aggarwal’s stake alone is worth a little more than 16,000 crore. The rest of the executives were granted stock options over the years, through the company’s employee stock ownership plan (Esop) policy.

Meanwhile, the top 10 leaders of Brainbees, which owns and runs the omnichannel retail brand Firstcry, stand to make at least 2,467 crore from the initial public offering (IPO), according to the Mint analysis. These are conservative estimates based on the valuation of both companies in their last private funding rounds. The shares may be priced higher in IPOs.

Ola Electric last raised capital from Temasek Holdings at a valuation of $5.4 billion on 23 October. The company priced each share then at around 118, a person aware of the matter said on the condition of anonymity.

On the other hand, some investors sold shares in Brainbees in December 2023 at a valuation of around $2.8 billion, at a price of 487.44 per share, according to the firm’s DRHP.

The two firms filed the DRHPs with the Securities and Exchange Board of India (Sebi) last month for their IPOs. Both companies are yet to secure the Sebi approval.

Ola Electric’s top leaders include Bhavish Aggarwal (chief executive), Suvonil Chatterjee (chief technology and product officer of Ola group) and Arun G.R. (group chief financial officer).

Chatterjee, who was elevated as chief technology officer in 2022, has shares worth 247 crore. Former Vedanta executive Arun G.R., who became the group’s finance head in 2021, has shares worth 115 crore.

For Brainbees Solutions, top gainers include Supam Maheshwari (chief executive), and co-founders Prashant Jadhav and Amitava Saha, who hold shares collectively worth 2,221.01 crore. The IPO of the retailer is likely to be one of the big-bang public offerings this year. Firstcry’s Maheshwari holds 28.89 million shares, valued at 1,408.37 crore, as of December.

In addition to the top 10 leaders, dozens of executives at both Ola Electric and Firstcry also stand to benefit from the Esop pool. Overall, Ola Electric employees own about 7.6%, and Brainbees’ employees own 12.4%, stake in the two companies through Esops, according to the DRHPs.

However, the exercise of these options and acquisition of shares will not be without tax implications. “Employees will need to pay tax when they exercise the options and purchase the shares. At this point, the excess of fair market value over the issue price is taxed as salary. Thereafter, when they sell the shares, they will need to pay a capital gains tax on the amount of consideration exceeding the fair market value,” said Rahul Charkha, partner, Economic Laws Practice.

Firstcry, one of the largest omni-channel platforms selling products for mothers, babies and kids, will fund new stores, warehouse construction, lease payments, expansion in Saudi Arabia, subsidiary investments, marketing, technology, and potential acquisitions through this fresh issue.

The company, which launched in India in 2010, has an app and website, and a large network of over 936 stores spread across 465 cities as of June 2023.

Ola Electric, which was founded in 2017 and started deliveries meaningfully only in early 2022, reported a net loss before taxes of 267.1 crore in the June quarter, and 1,472.1 crore for FY23.

Brainbees, on the other hand, reported a six-fold jump or 515% increase in its net loss for FY23 at 486 crore from 79 crore in FY22, Mint reported in December. The company’s revenue from operations during the fiscal year 2022-2023 increased 135% to 5,633 crore from 2,401 crore in FY22.

The company’s income from sale of products surged 2.37 times to 5,519 crore in FY23. This income accounted for 98% of the total operating revenue, according to the report.

The last time startup employees made life-changing sums through ESOPs was in 2021 when several companies such as Nykaa, Paytm and Zomato, among others, went public.

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Pooja Gupta

CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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CA Pooja Gupta (CA, ISA, having 15 years of experience. Educator and Digital Creator

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