launch a Super App amid a policy flux related to ecommerce entities, is rewarding BigBasket founders and has firmed up its post-acquisition plans for 1mg.
This comes just months after the group
spent more than $1.5 billion to acquire majority stakes in the e-grocer and e-pharmacy, besides taking a
minority stake in Mukesh Bansal’s Cultfit, which was earlier known as Curefit.
BigBasket’s founders – Hari Menon, Vipul Parekh and VS Sudhakar – have been given a new set of ‘management stock options’ or Msops, following the acquisition by the group’s digital arm Tata Digital, according to regulatory documents that ET has reviewed.
The Msops have been allotted as part of the group’s effort to ‘retain, attract and motivate’ talent in the online business-to-business (B2B) arm of BigBasket – Supermarket Grocery Supplies (SGS) – in which the Tatas picked up a more than 64% stake.
Meanwhile, Bansal, who is president of Tata Digital, has joined the e-grocer’s board.
These proposals were approved last month, the documents sourced by ET through business intelligence platform Tofler, showed.
SGS has also received close to Rs 85 crore from existing investor, UK-based CDC group, and has issued Esops to its employees as well.
The Msops were, however, issued based on past performance and future potential of eligible employees. Their vesting period begins three years from the date of allocation, the documents showed.
While it is common for startups to offer Esops to senior staff, the fact that founders of BigBasket have been granted Msops is an indication that the Tata group wants them to continue leading operations and grow the business.
BigBasket was last
valued at $2 billion after the acquisition and cash infusion from the Tatas, and the new grants could be valued higher as company’s valuation grows before its public market debut, expected in the next 1-2 years.
Meanwhile, founders of pharmacy etailer 1mg – Prashant Tandon and Gaurav Agarwal – have a lock-in period of five years and three months. During this period, they can only sell a small number of shares and will have the right to remain as directors based on certain terms even if they are not employed on the rolls of the company.
Both Tandon and Agarwal will need a written consent from the Tatas to sell any shares during the lock-in period, except for 5,577 shares held by Tandon and 3,713 shares held by Agarwal, which can be sold during the ‘management lock-in’ if they wish to.
A spokesperson for Tata Digital did not respond to ET’s email seeking comment. Menon did not comment on his new stock options, while Tandon was not immediately available for comment.
The documents showed that these timelines are effective from April 2021.
Tata Digital or its affiliates (Tata Group) will have the right of first offer (ROFO) if any of the financial investors of 1mg want to sell or transfer their stake in the e-pharmacy to a third-party.
This will be valid as long as Tata Digital and its affiliates continue to hold a minimum of 26%.
No shareholder of 1mg can transfer shares to a ‘restricted person’, which includes a ‘competing platform’ as well affiliates of Tata Digital, including any immediate family members.
In the e-pharmacy sector,
Tata Digital competes against Reliance Industries-owned Netmeds and venture funds-backed PharmEasy, besides smaller startups.
According to documents reviewed by ET, 1mg’s financial shareholders can ask for the company to go for an IPO after about five years, but Tata Digital will be under no obligation to sell shares in the IPO.
Typically, in an IPO, a company can choose to raise capital through fresh issuance of shares and existing investors can sell a part or their entire holding in the company.
Besides Tata Digital, Redwood Global Korea Omega and World Bank’s investment arm International Finance Corporation are among the other investors in the Gurugram-based company.
Quite a few
Indian startups have filed for IPOs now, and 1mg may also hit the public markets but the timelines are not known.
After its acquisition by Tata Digital, 1mg – rebranded as Tata Img – is said to have received a capital infusion of $100-$120 million in total and was valued at around $450 million,
ET reported in June.
The overall incentives and other rights held by founders indicate that they continue to be at the wheels of their ventures even after the acquisition.
ET reported in July that top executives of Tata Digital met founders like Menon, Tandon, along with Bansal to
strategize on the group’s ecommerce plans and they are expected to work closely with each other. Menon also sits on the board of 1mg.
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