The government has informed the prospective asset valuers of IDBI Bank that the lender has deferred tax assets of ₹11,520 crore and 120 properties in the top seven cities including Mumbai, Pune, and Chennai.
In response to the pre-bid queries from prospective asset valuers of IDBI Bank, the Department of Investment and Public Asset Management (DIPAM) said the bank has as many as 68 properties in Mumbai, 20 in Pune, nine in Chennai and seven in Ahmedabad. Besides, it has six properties in Kolkata and five each in Delhi and Hyderabad.
“The intangible on the balance sheet of IDBI Bank primarily comprises deferred tax assets of around ₹11,520 crore,” DIPAM said.
Deferred tax asset commonly refers to over payment of tax by an entity. Such excess tax paid can be adjusted against future tax dues.
ALSO READ: CBI books entertainment firm for causing ₹115 crore loss to IDBI Bank
DIPAM further said the asset valuer shall further identify intangibles not on the IDBI Bank balance sheet like brand name, branch network and value them.
The Terms of Reference for asset valuers included describing and listing of all the properties and assets, including intangibles such as trademark(s), title to property rights, being valued, as provided by the bank. Valuation of intangibles were required to be indicated separately.
Giving details of asset properties in the seven cities, DIPAM informed the asset valuer that such assets account for 94 per cent of the total written down value (after accounting for depreciation) of fixed assets of IDBI Bank.
In response to pre-bid queries from asset valuers regarding a list of assets and properties held by the bank, DIPAM said that a complete list of IDBI Bank’s fixed assets and relevant documents would be provided to the appointed asset valuer subsequent to execution of the confidentiality agreement.
The government along with LIC is selling nearly 61 per cent stake in IDBI Bank and has received multiple Expressions of Interest (EoI) for the same. As part of the sale process, it is now scouting for an asset valuer for conducting valuation of assets of IDBI Bank for its strategic sale. The last date for submitting bids by asset valuer is October 30.
The asset valuer would be required to value IDBI Bank’s investments; loans & advances; fixed assets and other assets.
DIPAM, however, gave the total count of properties that the bank has in the seven cities. These include 68 in Mumbai, 20 in Pune, 9 in Chennai, 7 in Ahmedabad 6 in Kolkata and 5 each in Delhi and Hyderabad.
“These properties comprise nearly 94 per cent of the written down value of fixed assets of IDBI Bank. Physical fixed assets like land and building etc constitute approximately only 3 per cent of the total assets,” DIPAM informed the prospective asset valuers.
The asset valuer would be required to ascertain the fair value of assets as well as liabilities of IDBI Bank.
“Assets of subsidiaries/ associates of IDBI Bank are not envisaged to be valued individually. However, the Asset Valuer is required to value the investments of IDBI Bank in such subsidiaries/ associates based on acceptable valuation standards,” DIPAM said.
The valuer would be required to identify intangibles not on the IDBI Bank balance sheet like brand name, branch network for valuing them, it added.
DIPAM, which manages government holding in state-owned enterprises, had in October last year invited EoIs for selling 30.48 per cent stake in IDBI Bank, along with 30.24 Per cent stake of LIC.
Govt, LIC hold 94.27% stake in IDBI Bank
The government and LIC together hold 94.72 per cent stake in IDBI Bank, which will come down to 34 per cent after the strategic sale.
At present, the government and RBI are in the process of vetting the bids received. Security clearance from the government and ‘fit and proper’ clearance from the RBI would be necessary for the bidders to move to the second stage of bidding process which is due diligence and subsequent invitation of financial bids.
Investors who have put in EoI have already submitted required information to secure fit and proper and security clearance.
Pursuant to the transaction, the government will own a 15 per cent stake and LIC 19 per cent in IDBI Bank, taking their total holding to 34 per cent.