Dhan ESOP Buyback: A Boost for Employee Liquidity

In a significant move, Dhan, a stockbroking and investment platform, has successfully executed a company-led ESOP buyback valued at nearly Rs 50 crore, benefiting around 180 employees, as confirmed by various sources acquainted with the situation. The buyback was entirely financed through the company’s internal reserves, demonstrating its consistent profitability over recent years.

Profitability Leads to ESOP Buyback

According to one source who preferred to remain anonymous, the company has maintained profitability for the last three years. This financial stability has made it possible for Dhan to conduct the ESOP buyback using its own cash reserves. Another source, also wishing to stay unnamed, mentioned that the average payouts for employees during this liquidity event ranged from Rs 25 lakh to Rs 35 lakh, though individual amounts varied based on personal ESOP holdings and duration of employment.

Founding and Growth of Dhan

Dhan was established in 2021 by Pravin Jadhav, a former executive at Paytm Money, and his team. The platform aims to cater to active traders and Gen Z investors by positioning itself as a technology-driven service. Remarkably, Jadhav did not gain personally from Paytm Money, where he spent nearly three years developing the business from the ground up. In contrast, within just four years of Dhan’s launch, he has facilitated substantial liquidity options for employees.

Background of Leadership Changes

In 2020, Startup Superb initially highlighted the exit of Pravin Jadhav, which resulted from disputes regarding compensation, ESOPs, and ownership structures with Vijay Shekhar Sharma at Paytm Money. Dhan has opted not to provide comments regarding the specifics of the ESOP buyback.

Dhan’s Financial Performance

The ESOP buyback follows a robust financial year for Dhan, which reported approximately Rs 900 crore in revenue for FY25, marking a significant rise from the prior year while remaining cash-flow positive, according to informed individuals. This liquidity event for employees occurred a few months after Dhan secured over $120 million in a Series B funding round led by Hornbill Capital in October, which elevated the company to unicorn status with a valuation nearing $1.2 billion.

Investor Returns and Market Position

This funding round also permitted early investors to exit, yielding impressive returns—some as high as 45X—to angel investors like Kunal Shah, the founder of Cred, and members from the founding network of PhonePe. Market analysts suggest that company-led ESOP buybacks of this nature reflect a strong confidence in long-term growth potential, especially in a competitive landscape with rivals such as Zerodha, Groww, and Angel One.