GQG invests ₹479 cr more in IDFC First

GQG Partners increased its stake in IDFC First Bank to 3.36% with an additional purchase of 5.1 crore shares. The investment firm has now invested over ₹41,478.7 crore in Indian companies in the past six months.

“The bank is always thinking of building for the long run. We are not looking at quarters. We are looking ahead into years and decades. The bank has been seeing strong deposit flow," said Vaidyanathan.

GQG is invested ₹184.49 billion in ICICI Bank, HDFC , SBI, ITC, Sun Pharma besides Adani group companies, according to Bloomberg.

The private banking company informed that the net proceeds of the sale of ₹478.7 crore will be utilised for subscribing to new shares of the bank through the exercise of options, to pay associated income tax, and to make contributions to specific pre-committed social causes, according to an exchange filing.

The MD and CEO also disclosed to the bank that no portion of the proceeds will be used for any personal expenses or other investments as described.

Out of the ₹478.7 crore stake sale, ₹229 crore would be used to pay IDFC First Bank to subscribe to new shares of the bank, ₹240.5 crore towards income tax payment for exercising the stock options, and ₹9.2 crore towards contribution to pre-committed causes including National Association of Blind for skilling and rehabilitation of blind people, contribution to Birla Institute of Technology Scholarship Program where he studied, and contribution to Rukmini Social Trust, and other such social contributions.

The bank gained 34.66% in the past three months, significantly outperforming the bro-ader market Nifty 50 index.

On 1 September, GQG Partners Llc acquired a 2.6% stake in private lender IDFC First Bank Ltd for ₹ 1,527.26 crore. Through a bulk deal on the exchanges, Cloverdell Investment Ltd, an institutional shareholder in IDFC First, has sold 278.7 million shares or 4.2% stake in IDFC First Bank for ₹2,480.3 crore to several entities including GQG Partners.

The private banking firm stated in an exchange filing that Vaidyanathan had initially received CMD stock options from Capital First as background information for the transaction.

In December 2018, Capital First merged with IDFC Bank. As part of the Amalgamation Scheme, which IDFC Bank and Capital First jointly agreed upon, these Capital First CMD stock options were converted to IDFC First Bank stock options. These options are being exercised in accordance with the fact that they are about to expire.

Vaidyanathan shall pay to the Bank the exercise price for the exercise of such Options, 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, according to the exchange filing.

“It is further disclosed that 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, Mr. 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," IDFC First Bank stated.

Soon after a damning report against the Adani Group by US-based short-seller Hindenburg Research on 24 January, as stocks of Adani group firms corrected, GQG Partners purchased significant stakes in several Adani group firms in quick succession.

This included a 5% acquisition in Adani Enterprises for ₹9,600 crore, 8.1% of Adani Power for ₹ 8,811 crore, 6.3% of Adani Green for ₹7,038 crore, 5.03% in Adani Ports for ₹ 7,467 crore, and 5.5% in Adani Transmission for ₹ 4,525 crore.

Shares of IDFC First Bank closed 1.26% higher at ₹96.55 apiece on the NSE.