This Article is From May 14, 2015

Why Rahul Yadav's Decision to Surrender Housing Shares Has Analysts Worried

Why Rahul Yadav's Decision to Surrender Housing Shares Has Analysts Worried

Rahul Yadav, Founder,

Rahul Yadav, the 26-year-old CEO of, created ripples in the e-commerce industry on Wednesday by announcing that he will "allot" his personal equity worth Rs 150 crore to Rs 200 crore in the online real estate start-up to 2,251 employees of the company. (Read)

Mr Yadav's decision, announced at townhall, came days after a dramatic turn of events involving his resignation and outburst against the board and investors followed by a U-turn.

According to Mr Yadav, employees will get approximately 1 year of their annual salaries worth of Housing stocks, a move that earned him a lot of admiration on Twitter.


But, analysts who track the e-commerce sector and in particular, are worried. Here's why,

1) There's no clarity whether Mr Yadav's decision to part away with his entire equity in Housing has the backing of the board that consists of SoftBank, Helion Venture Partners' and Nexus Venture Partners', companies that have funded the start-up.


2) Market participants like companies where promoters/founders have substantial holding because it shows that promoters/founders have confidence in the company. A decrease in promoter/founder holding is generally taken as negative.
 3) Some analysts see Mr Yadav's move as a "publicity stunt". was valued at Rs 1,500 crore in December 2014, so Mr Yadav's 4.5 per cent stake would be worth Rs 70 crore and not Rs 150 crore to Rs 200 crore as claimed, according to some analysts. Others say the amount of controversy Mr Yadav has generated over the last few months may not be good for the start-up.



Whatever the case may be, it can be safely assumed that the last word on Mr Yadav and has not yet been said.