Wednesday, December 6, 2023
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Tata Group-owned Titan, which has agreed to purchase founder Mithun Sacheti’s stake in CaratLane for Rs 4,621 crore, intends to buy employee stock options (ESOPs) of the jewellery retailer’s employees for about Rs 350 crore. This acquisition will increase Titan’s ownership of the company to 100 per cent.

CaratLane reportedly employs around 1,500 individuals, the majority of whom do not possess shares in the company. Among these, approximately 75 employees hold shares valued between Rs 340 and Rs 380 crore, constituting an estimated 1.72 per cent stake in the firm, according to media reports.

Titan presently has a 71.09 per cent stake in CaratLane, an increase from the 62 per cent it had acquired in 2016 when the company was valued at about Rs 563 crore. With the purchase of Sacheti’s 27.18 per cent stake, Titan’s share would rise to 98.28 per cent, valuing the company at nearly Rs 17,000 crore. The transaction is anticipated to be finalised by October 31 of this year, subject to regulatory approvals.

CaratLane’s ESOP buyout plans emerge at a time when the frequency of employee stock buyback programmes has diminished. In the first half of 2023, only nine companies announced liquidity programmes worth over $40 million, marking a significant drop from previous years. The year 2021 witnessed the volume of ESOP liquidity programmes surpassing the $400 million mark, while this figure exceeded $300 million in 2022, based on data from the equity management platform Qapita.

Nevertheless, recent ESOP buyback announcements by e-commerce giant Flipkart, worth around $700 million, and food aggregator platform Swiggy, worth $50 million, appear to have revitalised the momentum of such initiatives. With just these two announcements, the total ESOP liquidity quantum in 2023 has so far reached approximately $790 million, far exceeding previous years. CaratLane’s ESOP liquidity plans are set to further augment this expanding pool.


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