GQG Partner acquired 5,07,39,653 shares of IDFC First Bank from V. Vaidyanathan, MD and CEO of the bank in a block trade transaction, the company announced through an exchange filing.
The proceeds of the sale net of STT of Rs 478.7 crore will be utilized for subscribing to fresh shares of the bank through exercise of options for payments of income tax and for contributing to specific pre-committed social causes.
Explaining the sale the bank in its regulatory filing said, Capital First had originally granted CMD stock options to Vaidyanathan. Capital First merged with IDFC Bank in December 2018, and as part of the Amalgamation Scheme jointly agreed upon by IDFC Bank and Capital First, these Capital First CMD stock options were converted to IDFC FIRST Bank stock options. As these options are approaching their expiry, these are being exercised accordingly.
To exercise these options, Vaidyanathan is required to pay the exercise price to the Bank. Furthermore, Capital First was an entrepreneurial venture and the options have appreciated in value over the years due to progress made by Capital First and IDFC FIRST Bank. Hence, he is also required to pay Income Tax on the appreciation in the market value of the options over the option grant price, calculated as of the date of the exercise. To finance the same, he has executed the sale of the above-mentioned shares.
The bank further disclosed that Vaidyanathan had earlier transferred 5,00,000 shares of his holdings in Capital First equivalent to 69,50,000 shares of IDFC FIRST Bank, to a Social Trust of which he is a Trustee.
The Trust currently holds 50,93,860 shares of the Bank, net of periodic sales used for social contributions.
Including the shares held in the above-mentioned Social Trust, Vaidyanathan’s shareholding in IDFC FIRST Bank will increase from 0.58% as of June 30, 2023, to 1.04% of the paid-up capital of the Bank because of this transaction. Further, including options yet to be converted, his shareholding is 1.23% of the total share capital of the Bank.
The payments to the Bank and to income tax mentioned above include payments for recently exercised tranches made by availing loans, which are being repaid with the proceeds of the sale of the said shares. The above exercise of shares includes 16,00,000 options granted by the Bank post-merger.
