The government has informed the prospective asset valuers of IDBI Bank that the lender has deferred tax assets of Rs 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 Rs 11,520 crore," DIPAM said.

Deferred tax asset commonly refers to overpayment of tax by an entity. Such excess tax paid can be adjusted against future tax dues.

DIPAM further said the asset valuer will further identify intangibles not on the IDBI Bank balance sheet like brand name, branch network and value them, news agency PTI reported.

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.

DIPAM, while giving details of asset properties in the seven cities, informed the asset valuer that such assets account for 94% of the total written down value (after accounting for depreciation) of fixed assets of IDBI Bank.

The government agency 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, PTI reported.

The government along with LIC is selling nearly 61% 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 30 October.

The asset valuer would be required to value IDBI Bank's investments; loans & advances; fixed assets and other assets.

“These (properties that the bank has in seven cities) properties comprise nearly 94% of the written down value of fixed assets of IDBI Bank. Physical fixed assets like land and building etc constitute approximately only 3% 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.

In October 2022, DIPAM, which manages government holding in state-owned enterprises, had invited EoIs for selling 30.48% stake in IDBI Bank, along with 30.24% stake of LIC.

The government and LIC together hold 94.72% stake in IDBI Bank, which will come down to 34% 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% stake and LIC 19% in IDBI Bank, taking their total holding to 34%.