In a block transaction on Monday, GQG Partners purchased 5,07,39,653 crore shares of IDFC First Bank from managing director and chief operating officer V Vaidyanathan for Rs 478.7 crore.
The deal’s earnings will be used to pay associated income tax, subscribe for new bank shares through option exercise, and support a number of predetermined social causes.
According to a press release from the lender, Vaidyanathan will pay IDFC First Bank Rs 229 crore to purchase fresh shares, and Rs 240.5 crore will be used to pay income tax for exercising stock options. 9.2 crore rupees will be donated to causes already committed to.
As a result, after the agreement is implemented, Vaidyanathan’s ownership interest in the bank will rise from its current 0.58 percent as of June 30, 2023, to 1.04 percent. In addition, his investment represents 1.23 percent of the bank’s entire share capital, including options that have not yet been converted.
Vaidyanathan had initially received chief managing director (CMD) stock options from Capital First. These stock options were changed to IDFC First Bank stock options after Capital First and IDFC Bank merged in December 2018. These options are being exercised in accordance with the fact that they are about to expire.
Vaidyanathan must give the bank the exercise price in order to exercise these options. Additionally, Capital First was a business partnership, and as a result of the advancements made by Capital First and IDFC First Bank, the value of the options has increased over time. As a result, he must also pay income tax on the increase in the market value of the options over their grant price as of the exercise date.