Govt cancels IDBI Bank asset valuer appointing bid, fresh RFP to be issued

In a recent development, the government announced the cancellation of the bid process for appointing an asset valuer for the strategic sale of IDBI Bank Ltd. The decision stems from a lack of sufficient interest from bidders, as only a single bid was received.

Fresh Request For Proposal (RFP) on the Horizon

• A corrigendum issued by the Department of Investment and Public Asset Management (DIPAM) stated, “It has been decided with the approval of the competent authority to cancel the present RFP and to issue a fresh RFP for the selection of an asset valuer for the strategic disinvestment of IDBI Bank.”
• The move aims to attract broader participation by reviewing and adjusting some of the bid criteria.

Government Official’s Statement

• A government official clarified the situation, mentioning, “We had only a single bid. A fresh RFP will be issued soon after we review some of the criteria to enable better interest from bidders.”

IDBI Bank Strategic Sale Transaction Status

• The strategic sale of IDBI Bank, in which the government and Life Insurance Corp. (LIC) aim to sell nearly 61% stake, remains on course.
• However, as per the Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey, the transaction will not be concluded in the current fiscal year.
• Pandey stated, “We practically don’t think that before March we can conclude it (IDBI Bank stake sale).”

Key Details of the Bid Process

• As part of the strategic sale process initiated by DIPAM on September 1, bids were invited for appointing an asset valuer, with the original deadline set for October 9.
• The deadline was later extended to October 30. The asset valuer’s role included identifying intangibles not on IDBI Bank’s balance sheet, such as brand name and branch network, and assigning them a value.

Scope of Asset Valuation

• The terms of reference for the asset valuers involved describing and listing all properties and assets, including intangibles like trademarks, provided by the bank. The valuation of intangibles was required to be indicated separately.

Overview of IDBI Bank’s Assets

• DIPAM revealed that IDBI Bank owns 120 properties in the top seven cities, with Mumbai having the highest count of 68 properties, followed by Pune with 20.
• The asset properties in these cities account for 94% of the total written down value of fixed assets of IDBI Bank after accounting for depreciation.

Stakeholding Changes Post Strategic Sale

• After the strategic sale transaction, the government and LIC together will hold a reduced stake of 34% in IDBI Bank, with the government owning 15% and LIC holding 19%. Currently, they jointly hold 94.72% stake in the bank.

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