The Department of Investment and Public Asset Management (DIPAM) has said that the asset valuer for IDBI Bank will identify intangibles not on the balance sheet like brand name, and branch network. This is part of the exercise being undertaken for strategic disinvestment of IDBI Bank.

The centre and LIC plan to sell 30.48 per cent and 30.24 per cent respectively of their holding in IDBI Bank. Along with sell of 60.72 per cent (centre and LIC combined) holding, management control in IDBI Bank will also be transferred to the strategic buyer. Post divestment, LIC will hold 19 per cent in the bank, while the centre will have 15 per cent.

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On September 1, DIPAM invited request for proposal (RFP) to engage an asset valuer for strategic disinvestment of IDBI Bank. Various prospective bidders raised queries and one such query was whether intangible assets will be restricted to just those intangible assets which are appearing on the balance sheet.

In response to the query, DIPAM said, “The intangibles on the balance sheet of IDBI Bank primarily comprises of deferred tax assets of around ₹11,520 crore. The asset valuer shall further identify intangibles not on the IDBI Bank’s balance sheet like brand name, branch network and value these as a part of terms of reference.”

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Tangible assets are physical and measurable assets that are used in a company’s operations. These include such as property, plant, and equipment. Intangible assets are nonphysical assets used over the long term. Intangible assets are not physical but add to a company’s future worth and can be far more valuable than tangible assets. These include trademarks, franchises patents, goodwill and copyrights. Both of these types of assets are initially recorded on the balance sheet, which helps investors, creditors, and banks assess the value of the company.

Details of assets

Some bidders request for a complete information on the assets of IDBI Bank for the purpose of submitting quotation which include a list of the fixed assets, assets given on lease and CWIP assets along with their brief description, location, and area. DIPAM responded by saying that the 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. It also provided a list of number of properties in top 7 cities (Delhi, Mumbai, Kolkata, Chennai Hyderabad, Ahmedabad and Pune).

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“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,” the department said. It may be noted that the 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”.

Bid for appointment of asset valuer can be submitted till 5:45 pm on Monday which will be opened on Tuesday.