IDFC First Bank: Rajiv Jain's GQG acquires bank shares from MD & CEO V Vaidyanathan

IDFC First Bank on Monday said Rajiv Jain's GQG Partners has acquired 5,07,39,653 shares of the bank from MD & CEO V Vaidyanathan in a block trade transaction. The bank said the proceeds of the sale net of STT and other brokerage charges of Rs 478.70 crore will be utilised for subscribing to fresh shares of the bank through exercise of options, for payment of related income tax and for contributing to specific pre-committed social causes.

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 were approaching their expiry, they were exercised accordingly, the bank said in a BSE filing.

"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 said.

IDFC First Bank said Vaidyanathan had earlier transferred 5,00,000 shares of his holdings in Capital First, which is equivalent of 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 per cent as of June 30, 2023, to 1.04 per cent of the paid-up capital of the Bank because of this transaction. Further, including options yet to be converted, his shareholding is 1.23 per cent of the total share capital of the bank," the bank said.

"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.

The bank has been informed by the MD and CEO that no part of the proceeds will be used for any personal consumption or for making any other investments other than in the Bank, income tax and for the reasons described," IDFC First Bank said.

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