Tata Group-owned Titan, which has agreed to purchase founder Mithun Sacheti’s stake in CaratLane for Rs 4,621 crore, is planning to buy employee stock options (Esops) of the jewellery retailer’s employees for around Rs 350 crore.
This will take Titan’s ownership in the company to 100 per cent.
CaratLane reportedly has around 1,500 employees, most of whom do not own shares in the company.
However, around 75 employees have shares worth Rs 340-380 crore, accounting for an estimated 1.72 per cent stake in the firm, according to media reports.
Titan holds a 71.09 per cent stake in CaratLane, up from the 62 per cent it had purchased back in 2016, when the company was valued at around Rs 563 crore.
With the purchase of Sacheti’s 27.18 per cent stake, Titan’s share will jump to 98.28 per cent, and value the company at roughly Rs 17,000 crore.
The deal is expected to close by October 31 this year, depending on regulatory approvals.
CaratLane’s Esop buyout plans come at a time when the pace of employee stock buybacks has slowed.
During the first half of 2023, only nine companies announced liquidity programmes, worth over $40 million.
This was a sharp decline from previous years.
The year 2021 saw Esop liquidity programmes cross $400 million while they were over $300 million in 2022, according to the data from equity management platform Qapita.
However, recent Esop buyback announcements by ecommerce major Flipkart (worth around $700 million) and food aggregator platform Swiggy (worth $50 million) seem to have sped up such programmes.
With these two announcements alone, the amount of Esops in 2023 so far has reached around $790 million, much higher than in previous years.
CaratLane’s Esop liquidity plans will further contribute to this growing pool.