GQG Partners acquires shares of IDFC First Bank via block deal; IDFC First Bank share price rises nearly 2%

GQG Partners has acquired about 5.1 crore equity shares of IDFC First Bank Ltd's MD & CEO, V. Vaidyanathan, in a ₹479.50-crore block deal transaction , said the bank in an exchange filing today. IDFC First Bank share price rose nearly 2% following the block deal news. IDFC First Bank share price opened at ₹97.24 apiece on BSE, on Monday.

The private banking company stated in an exchange filing that it has been informed that the net proceeds of the sale of ₹478.7 crore will be used to subscribe for 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.

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 sales proceeds, ₹229 crore would be to pay to 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 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 a for-profit business, and as a result of the advancements made by Capital First and IDFC FIRST Bank, the options have grown in value over time. Because of this, he also has to pay income tax on the increase in the market value of the options over the grant price, determined as of the exercise date, the IDFC First said in an 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. 

On the technical front, analysts said that IDFC Bank share price witnessed a gap up opening but not major traction post that, overall the counter is in uptrend, and dips to be considered as buying opportunity, post today's gap up Friday's low around 94.60 is pivotal as long it holds expect uptrend back towards 104.