Subsidiaries Division, FM&S Wing Ref: Annexure II to ON 125/2016 Dt. 17.12.2016

Sub:Monetization of Non-Core Assets: Stake sale in Domestic Subsidiaries/ Associate

Empanelment of Consultant(s)/ Investment Banker(s)/ Merchant Banker(s) for Advising and Managing the Process of Disinvestment of Canara Bank’s 70% stake in M/s Canbank Factors Ltd and 13.45%stake in M/s Can Fin Homes Ltd, Ref : FM&S Wing/Sub/RFP- Stakesale 01/2016-17dt05.12.2016

REPLIES TO THE QUERIES RECEIVED FROM PROSPECTIVE BIDDERS

Sl No / Query / Reply
1 / Since the divestment in Can Fin Homes Ltd would mainly be through Block trades, whether there is any cap on the number of transactions and value per transaction? Whether any additional right will be provided to an investor who acquires majority of the stake / As of now only one investor envisaged and additional rights also not envisaged.
2 / Is there a cap on number of merchant bankers selected post the commercial bid? (On page 8 it is mentioned that Canara bank intends to empanel minimum three bidders for each of the companies). / As per RFP - 3 bidders
3 / Can the submission of EMD be shifted at the appointment stage instead of bid submission stage? And any exemption can be given to MSME registered customers / No, as per RFP
4 / Clause 7, Page 12 Earnest Money Deposit - The second paragraph mentions that the EMD will be returned on receipt of Bank Guarantee for guarantee amount. The document however does not mention any guarantee amount. Can you please clarify? / Rs 1 lac or an equal amount guarantee can be provided by empanelled consultants. Guarantee format will be provided
5 / Documentary evidence for all the aforementioned eligibility criteria needs to be submitted. Clarify the nature evidence that would work as documentary evidence. Since many of the past deals such as QIP, Disinvestment/IPO are public deals and can be tracked easily from public domain, we request you to please relax the condition of submission of documentary evidence as most of our clients do not provide satisfactory completion certificate
For Investment Banking, Deal closure, Deal size also evidence to be produced / Two years certificate from the clients and older than that Current statutory Auditors certificate (as on 31.03.2016) may be accepted
6 / General Terms and conditions to contract-Technical Bid- Satisfactory completion certificates from clients should be furnished as proof of completion of assignments – We generally in past have never sought any completion certificate from our clients for successful completion of transaction. We request you to relaxthis condition / Two years certificate from the clients and older than that Current statutory Auditors certificate(as on 31.03.2016) may be accepted
7 /
  1. Personnel/ Professional (Point 5, Page 6): The definition for personnel, as per scoring criteria, requires minimum qualification as that of a Chartered Accountant. However, some of the professionals in Deal Advisory are MBA/ PG Diploma in Management. Please let us know if this criteria can be considered for scoring
/ MBA/PG Diploma in Management from IIM, XLRI and similar reputed institutions may be considered. For which necessary changes will be made on website.
8 /
  1. Partners Definition: Point 4, Page 6 – The text defines Partner as professional sharing profit in a Chartered Accounting Form/ LLP. However, KPMG in India is legally structured as a private limited company and has designated partners, who are not partners in the parlance of a partnership/LLP firm. Request if you can provide more clarity in this regard.
/ Partners orprofessionals team of 5 members with MBA /PGDB from IIM, XLRI & similar reputed institutions may be acceptable.
9 / TheBIDDER/SELLER/CONTRACTOR/SERVICEPROVIDERundertakesthatit has not supplied/is not supplying similar product/systems or sub-systems/servicesatapricelowerthanthatofferedinthepresentbid toanyotherBankorPSUorGovernmentDepartmentortoanyother organization/entitywhetherornotconstitutedunderanylawandifitis foundatanystagethatsimilarproduct/systemsorsubsystems/services wassuppliedbytheBIDDER/SELLER/CONTRACTOR/SERVICEPROVIDERto anyotherBankorPSUorGovernmentDepartmentortoanyother organization/entitywhetherornotconstitutedunderanylaw,atalower price,thenthatveryprice,withdueallowanceforelapsedtime,willbe applicabletothepresentcaseandthedifferenceinthecostwouldbe refundedbytheBIDDER/SELLER/CONTRACTOR/SERVICEPROVIDERtothe BUYER,if thecontract hasalreadybeen concluded / Matter will be taken up with legal section after their advice will be put up on the website.
10 / What shall be timeline for submitting the offers from the prospective buyer? / Will be informed to the successful bidder
11 / Extension of the time schedule for completion of assignment from 90 to 120 days permissible / Not possible
12 / Request the Bank to reduce the extension of the validity of the Integrity Pact from 5 years to a period of 1 year. / Matter will be taken up with legal section after their advice will be put up on the website
13 / Is Canara Bank open to sell its stake in the open market (stock exchange route) through bulk / block deal? Which of the 3 appointed consultants will manage this and how the fee be split? / No open market applicable
14 / At what stage of the process would merchant bankers be required to make a presentation to the management? How would the presentations be factored in the selection criteria / marking scheme? / After the technical bid selection. No marks given. It may factored into by the Competent Authority
15 / Prospective buyer(s) is expected to bring in their expertise and knowledge sharing as a strategic investor to the company. How will this expectation to be factored in selection of final bid as the strategic investor may not be the highest bidder? / Net proceeds to the Bank, main criterion for selection. However competent authority may take a call regarding strategic investors which will be informed to success bidders.
16 / What would be role and rights of the strategic investor? These details would be critical for the strategic investor to decide on their bid values. / As per RFP. However it will be informed to the successful bidder later.
17 / Under the terms of Reference (ToR), the selected merchant bankers are expected to, amongst other actions, assist in preparation and issuance of advertisement / EoI / RFQ / RFP; organise pre-bid meeting(s); analyse and reply to queries of prospective bidders etc. How will the process be run post selection of multiple merchant bankers? Also, will the marketing material be common between the selected merchant bankers? / They have their own liberty and required details will be provided on request subject to approval of competent authority of Bank.
18 / Clause 12, Page 13 Submission of Bids - The last paragraph mentions the cut-off date as December 28, 2016. Can you please clarify? / Cut off date is 26.12.2016 (correction being made)
19 / There is an overlap in the formats of Annexure C and Annexure J-2. Please let us know the format in which the Technical Bid needs to be submitted. Please provide the appropriate reference for Annexure J-1 in the formats. Further, the table in annexure J-2 references to Annexures J-4 and J-5 which are not part of the RFP. Can you please include the relevant formats? / All the formats like Annexure C and Annexure J-2 has to be provided as per RFP and appropriate reference for Annexure J-1 is being made and separate annexure J-4 will be provided and Annexure J-5 is not required
20 / Clause 4 (Page 10): Eligibility criteria states IT return to be submitted. While Point 4(ii) Pg 17 mentions only audited Financials. Trust only the audited Financials should suffice. / Audited financials of the Company for March 2016 will be only required and IT return not required (changes being made). Split up details of the income evidencing the income from consultancy to be certified by the auditors.
21 / Annexure c:Global and local experience in the field under reference, implementation as a consultant. The relevant document / certificate should be enclosed.
Can corporate brochure be provided as the supporting document? / Annual reports of the bidder evidencing their global & domestic operations may be accepted
22 / Annexure c: Details of strategic consulting / valuation / M&A of service industry.
Details of credentials. (Give scope of work for each assignment) with letters from the respective organizations supporting the same / For assignment within 2 years client completion certificate is needed. Above that certificate from statutory auditor as on 31.03.2016 with full execution details may be accepted
23 / Annexure C.: Assignment in Public & Private Sector NBFC or Non-deposit taking companies in India can be considered / No
24 / ResumeoftheidentifiedteampersonsintheformatenclosedasCV formatto this document for the team members / Yes, separate form for each member
25 / To recover all sums already paid by the BUYER, and in case of the Indian BIDDER/ SELLER /CONTRACTOR/SERVICE PROVIDER with interest thereon at 2% higher than the prevailing Prime Lending Rate of (Name of the Bank/Financial Institution) while in case of a BIDDER /SELLER /CONTRACTOR/SERVICE PROVIDER from a country other than India with Interest thereon at 2% higher than the LIBOR. If any outstanding payment is due to the BIDDER/SELLER /CONTRACTOR from the BUYER in connection with any other contract such outstanding payment could also be utilized to recover the aforesaid sum and interest. The BUYER shall also be entitled to recover the replacement costs from BIDDER/SELLER/CONTRACTOR/SERVICE PROVIDER. / Revised modifications in the format will be provided to the successful bidder
26 / Particulars in respect of Empanelment in Merger & Acquisition, Valuation, consultancy and stake sale.
Clientcertificate/ contractwithclientin supportofthe information above / For the last two years client certificate and earlier years from current statutory auditors certificate
27 / In order to submit the Bid document, whether all the details need to be provided in the format of Annexure C only or separate pages can be submitted giving the necessary details. / Separate pages can be submitted in the required format
28 / Apart from the information about the bidder, do we need to provide the positioning points, indicative valuation and potential investors for Can Fin Homes and Canbank Factors / Not now. After short listing will be discussed.
29 / There is a scoring pattern for firms with 5 partners and 5 full time professional staff which will mainly be applicable for a partnership firm. How the same would be evaluated in case of a company which consists of a structure of MD, CEO, VPs etc? / In case of others, professional team consisting of five persons. The modification in RFP is being made.
30 / In case of documentary evidence for the deals completed in the last 5 years, whether the documents filed with regulator/League tables on third party portals will be considered as an adequate evidence in lieu of completion certificates from clients / For dealer with in 2 years certificate from the clients and above that certificate from the Current statutory auditors of March 2016.
31 / In case of a branch office in Bangalore but with the deal team situated in Mumbai, whether that will lead to maximum score in the local presence section / Yes, as per RFP
32 / In terms of details of the proposed deal team, kindly provide the details that needs to be covered in their curriculum vitae. Annexure G refers to the advisory experience of the person involved in the deal team. Whether capital market experience can also be provided in the same annexure / As per RFP, the capital market experience not to be covered.
33 / Since the Pre-bid meeting is being held in Bangalore, whether the minutes/clarifications of the meeting will be shared over mail, in case the participant is unable to attend the meeting? Is there any provision of participating in the pre-bid meeting through conference call/video conferencing? / Minutes of the meeting will not be shared. Only clarifications will be provided in the Website and no provision for video conference.
34 / Indicative timeline for presentation post submission of technical bid and the points to be covered in the presentation / Will be informed to the successful technical bidders.
35 / For deal details in NBFC and HFC space, whether deals done in debt capital market would also be relevant? / No, these deals will not relevant
36 / In terms of experience in Investment Banking, whether Block deals would also be relevant? / Yes
37 / With respect to the appointment of a Merchant Banker, only Annexure J-1 needs to be submitted / All forms are required as per RFP
38 / For the commercial bid, incase applying for both the assignment, whether Annexure D needs to be submitted or Annexure E-1 and E-2. In case Annexure D needs to be submitted, then the bid for both the assignment needs to be separately mentioned? / Yes, to be submitted as per RFP
39 / Generally in such type of large consultancy assignment consortium of 2-3 members is allowed.
Request you to kindly relax the condition and allow consortium. / Not allowed
40 / Bidder are requested to deploy the resources from the award of the assignment and therefore will incur cost, request you to kindly relax the payment milestone and provide 10-20% mobilization advance instead of Drop Dead fee of Rs. 5,00,000/- so that bidders can depute their dedicated resources for successful completion of milestone in time bound manner. / Not possible
41 / Whether the prospective buyer has to necessarily be a strategic investor? Generally, a strategic buyer would like to have at least 24-25% stake, so will there be a possibility of further stake sale by Canara Bank in future to the same investor and thereby providing a right of first refusal / Need not be
42 / Can the prospective buyer be a financial investors / private equity fund / family office? / Can be anyone who give highest value
43 / Is the entire 13.45% stake required to be sold to a single investor or there can be multiple investors? / Single investor
44 / If Canara Bank is open to sell the stake to multiple investors, will the deal with all the investors happen at the same price? Will the deals with separate investors happen separately or there will be a joint closing? What happens if the bids for lesser stake are sourced by each of the three appointed consultants and how will the fee be split in such a case? / Single stake sale Highest net proceeds will be final criteria.
45 / What happens if the solicited bid is for less than 13.45% stake? / Not acceptable.
46 / Will all the 3 appointed consultants prepare separate teasers and information memorandums / Yes
47 / Will all the 3 appointed consultants run the process separately and in isolation / Yes
48 / Will the investor universe be prepared and investors be allocated to each of the appointed consultants, otherwise the same set of investors may be approached separately by each of the appointed consultants / All shortlisted may approach all investors
49 / In case the appointed consultants are required to jointly run the process, how will the responsibilities be split amongst the appointed consultants? / Not Applicable
50 / Will the bank appoint any other intermediaries like legal counsels (for drafting and finalising various agreements in relation to the transaction), tax advisors, etc. for the purpose of this transaction? Who will bear the cost of appointment of such oter intermediaries? / No, all the advisors & legal consultants to be taken care of by the shortlisted bidders. But agreements are subject to to clearance by the Bank.
51 / If any prospective investor wants to conduct customary due diligence, how will Canara Bank facilitate that for each of the companies / Necessary support will be given to the successful bidder
52 / Will there be reasonable access to the management of the two companies for arranging meetings with prospective investors and for additional information / data that may be required for preparation of information memorandum and other relvant material that may be required for marketing the deal? / Yes, successful bidders will be given access
53 / Can there be a provision for facilitating a board seat / any other special rights for the prospective investors in each of the companies / Not envisaged now
54 / In Annexure B 5thpara, what is the definition or meaning of the term “offence” ? Which matters would get covered by that clause? AsSEBI registered entities, some of the group companies may have SEBI related matters or orders which are related to their routine business and may not adversely impact the performance of the advisory services to Canara Bank. Are such matters required to be reported? / All the matters which are required to be reported in annual report as per statutory / regulatory provision only need to be reported.
55 / As regards the Indemnity, it is mentioned on page 25 of the RFP that the selected bidder has to execute a Deed of Indemnity as per the prescribed format. Please share the format of Deed of Indemnity. / Will be shared with the successful bidder
56 / SBI Capital Markets Limited is a company set up under the Companies Act, 1956. We do not have the concept of Partners in our company. All of our employees are on the payrolls of the Company. We hope that the Annexures J-2, J-4 & J-5 are not applicable to us as a merchant banking company.
There are no annexure numbers J-4 & J-5 forming part of the original RFP / Partners/full time professional team details to be furnished in form J-4 which will be put on website.
57 / SBI Capital Markets Limited is aCompany set up under the Companies Act, 1956. We do not have the concept of Partners in our company. All of our employees are on the payrolls of the Company. We hope that the Annexure J-3 is not applicable to us as a merchant banking company. / Partners/full time professional team details to be furnished in form J-4 which will be put on website.
58 / Cost elements – preparing agreements and related works / To be borne by the bidder
59 / Due diligence document / Will not be prepared by the Bank
60 / Block deal size / To be decreased
61 / Technical bid opening / Will be opened in front of the Bidder for documents. No result will be announced.

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