IDFC First Bank MD and CEO V. Vaidyanathan sold 5.07 shares of the bank to US-based GQG Partners in a block trade transaction, the bank announced on Monday.
"The bank has been duly informed that the proceeds of the sale net of STT and other brokerage charges of Rs 478.7 crore will be utilized 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," IDFC First Bank said.
As part of a merger between Capital First and IDFC Bank in December 2018, Vaidyanathan was granted stock options. As these options are now approaching their expiry, he is exercising them by paying exercise price to the bank, according to a report by The Economic Times.
"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," IDFC First Bank said.
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, it 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 said, adding that it 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.
Earlier on September 1, bulk deals data showed that GQG Partners has picked up 17.1 crore shares or 2.58% stake in the lender for about Rs 1,527 crore. The transaction was done at Rs 89 apiece.