GQG buying IDFC First Bank stake: I am not selling out. It is coming back for reinvestment in the bank, says Vaidyanathan

economictimes.indiatimes.com:

V Vaidyanathan, MD & CEO, IDFC First Bank, says “currently my direct shareholding and holding in the trust – I also run a social trust which has 50.9 lakh shares of the bank– as of June 30, was 0.58%. After this transaction, it will increase to 1.04%. So effectively, this transaction is increasing my holding and that is important to note. And including the options yet to be converted, my holding will be 1.23% in the bank. GQG had already bought close to 3.9% or 4%. Together with this, they will probably go to around 4.7% that is my understanding. ”

The market perceives that when promoters are selling out, it means that they feel that the stock is richly priced or they feel that the franchise value has lived up to its expectations but that is not the case in IDFC First Bank. What prompted you to sell your personal stake to GQG Partners?
First of all, thanks for asking that question.

It gives me an opportunity to clarify. You should very importantly note that there are two legs to the transaction. So, do not note only the sell portion.

The entire proceeds of Rs 478 crore is being used to purchase options of the bank, exercise the options of the bank. I am paying Rs 229 crore back to the bank itself. Number two, I am paying packs of tax of Rs 240 crore.

Number three, there are some committed courses that I have for which I am contributing Rs 9.2 crore. I want to tell you that first of all I am not selling out. It is coming back for reinvestment in the bank because these are options issued to me at an earlier stage at a lower price.

Unlock Leadership Excellence with a Range of CXO Courses