GQG Partners on Monday acquired 5,07,39,653 crore shares of IDFC First Bank for Rs 478.7 crore from managing director and chief operating officer V Vaidyanathan via a block deal.

The proceeds from the deal will be used for subscribing to fresh shares of the bank by exercising options for payment of related income tax and for contributing to specific pre-committed social causes.

According to the lender’s press release, Vaidyanathan will utilise Rs 229 crore as payment to IDFC First Bank to subscribe to new shares, Rs 240.5 crore will be used for payment of income tax for exercising the stock options. Meanwhile, Rs 9.2 crore will be contributed to pre-committed causes.

Therefore, post the execution of the deal, Vaidyanathan’s stake in the bank will increase to 1.04 per cent from the existing 0.58 per cent as of 30 June 2023. Further, including options yet to be converted, his shareholding is 1.23 per cent of the total share capital of the bank.

Capital First had originally granted chief managing director (CMD) stock options to Vaidyanathan. Post the merger, Capital First merged with IDFC Bank in December 2018; these stock options were converted to IDFC First Bank stock options. As these options are approaching their expiry, they 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.

At 1:50 pm, IDFC First Bank traded at 1.26 per cent up at Rs 96.55 as compared to opening at Rs 97.30 on the National Stock Exchange, on Monday.

First Published: Sep 11 2023 | 3:42 PM IST

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