GQG Partners, the US-based boutique investment firm, has acquired 5.07 crore shares of IDFC First Bank for Rs 478.7 crore from the lender’s managing director and CEO V. Vaidyanathan.
The unique transaction, which accounts for 0.76 per cent of the bank’s equity as of June 30, 2023, will see Vaidyanathan subscribing to fresh shares of the bank through the exercise of stock options.
Part of the proceeds will also be used by him for the payment of related income tax and specific pre-committed social causes.
Out of the total proceeds, Vaidyanathan will pay Rs 229 crore to IDFC First Bank to subscribe to the new shares issued by the private sector lender.
He will pay another Rs 240.5 crore to the tax authorities for exercising the stock options while another Rs 9.2 crore will go towards social causes.
IDFC First Bank added that Vaidyanathan had earlier transferred 5 lakh shares of his holdings in Capital First which is equivalent to 69.5 lakh shares of the lender to a social trust.
The trust holds 50,93,860 shares (0.07 per cent) of the bank, net of periodic sales used for social contributions.
It disclosed that including the shares held in this trust, Vaidyanathan’s shareholding in the bank will increase from 0.58 per cent as of June 30, 2023, to 1.04 per cent of the bank’s paid-up capital.
The lender said Vaidyanathan will exercise stock options that are approaching their expiry period.
The bank’s CEO, in his personal capacity, is required to pay the exercise price to the lender for the options.
Vaidyanathan is 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 payment of income tax, he entered into a transaction with GQG Partners.
While GQG Partners had grabbed headlines for its investments in Adani group firms after March, it has also upped its India play.
Earlier this month, the investment firm had acquired 17.6 crore shares or nearly 2.6 per cent stake in the private sector lender from Warburg Pincus. Some of its other investments include ITC Ltd (1.48 per cent), Patanjali Foods (2.73 per cent), JSW Energy and Cipla.
