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The government has made another effort to appoint an asset valuer for IDBI Bank. This could further delay the strategic disinvestment process. This is the second attempt to appoint a valuer, as the previous one was cancelled due to poor response.
“Fresh bids are hereby invited for engagement of an Asset Valuer for the Strategic Disinvestment of IDBI Bank Limited,” the Department of Investment & Public Asset Management (DIPAM) said in the Request for Proposal (RFP) document. While the pre-bid meeting has been scheduled for December 18, the last date for submitting a bid is January 5. The bids will be opened on January 8, after which fresh dates will be announced for presentation by the shortlisted bidder and the opening of the financial bid.
The previous RFP, dated September 1, was cancelled last week, and then it was decided to invite fresh bids. Although DIPAM did not give a reason for cancellation, it is believed that very limited participation by interested parties forced the government to cancel.
IDBI Bank is listed on NSE and BSE in India. In order to determine the value of IDBI Bank, the asset valuer is required to carry out the fair valuation of all the assets and liabilities appearing on the balance sheet of IDBI Bank, as on a date prescribed and notified by DIPAM, on an “as is where is” basis.
According to the Department, the asset valuer will work closely with the Transaction Advisor and Legal Advisor for this purpose during the entire course of the assignment. The valuer is required to follow three principles - Income Approach, Market Approach, and Cost Approach for valuation. The RFP listed investments (including investments in subsidiaries and associates and joint ventures and affiliates, as applicable), loans & advances, fixed assets, and other assets as assets. It also mentioned a list of properties in the top seven cities (Delhi, Mumbai, Kolkata, Chennai Hyderabad, Ahmedabad, and Pune).
“These properties comprise nearly 94 per cent of the written down value of fixed assets of IDBI Bank. Physical fixed assets like land and buildings, etc., constitute approximately only 3 per cent of the total assets,” the RFP said. Further, it mentioned deposits, borrowings and other liabilities & provisions under liabilities
As of March 31, 2023, LIC holds 49.24 per cent, while the government has 45.48 per cent in IDBI Bank. In the strategic disinvestment of IDBI Bank, the Preliminary Information Memorandum (PIM) for inviting Expression of Interest (EOI) was published on October 7, 2022. It was mentioned that the government will sell 30.48 per cent and LIC will divest 30.24 per cent, aggregating to 60.72 per cent, along with a transfer of management control in IDBI Bank.
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