IDBI Bank has ruled out fresh valuation of its mortgage arm, IDBI Home Finance, which has been on the block for a year.
“The price was determined through a bidding process. There is no question of revaluation. Either we go with the price or we scrap the whole thing. In a bidding process, there is no system of revaluating the price,” IDBI Bank Chairman and Managing Director Yogesh Agarwal told reporters on the sidelines of a conference on Tuesday evening.
Dewan Housing Finance had emerged as the highest bidder. However, a day before the bank’s board was to meet, the government sought a review. IDBI Bank has approached the government afresh. The government is yet to respond.
Sources close to the development had earlier told Business Standard that the bank planned to sell its shares in the home finance arm at Rs 21.46 each. At this price, the total amount came to a little over Rs 350 crore.
The bank revised the proposal after infusing Rs 20 crore into the company to shore up its capital to meet the National Housing Bank norms.
In August 2008, IDBI Bank had valued IDBI Home Finance at Rs 351 crore, which was lowered to Rs 333 crore in early January on grounds of depressed market conditions. The valuation conducted in January included the value of Rs 22.95 per share and a premium.
The highest bid of Dewan Housing was Rs 21.46 and the total amount offered was Rs 311.12 crore. Tata Capital was the second-highest bidder (Rs 225 crore), followed by Religare (Rs 221 crore).
Since June 2008, the basis for the valuation, IDBI Home Finance has seen a 9.7 per cent rise in asset base, while its profits have gone up by 3 per cent (see table).
Agarwal said the public sector player was also in the process of setting up an asset management company for which it had sought permission from the Securities and Exchange Board of India.
Agarwal said he expected the go-ahead during the current financial year.
