REQUEST FOR PROPOSAL.

ENGAGEMENT OF APPRISER FOR UNDERTAKING

VALUATION OF
STAR UNION DAI-ICHI LIFE INSURANCE COMPANY LTD

Ref: BOI:HO:TRY:328

Dated :26th Oct, 2015

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PART 2: DISCLAIMER
The information contained in this Request for Proposal (RFP) document or
information provided subsequently to bidder(s) or applicants whether verbally or in
documentary form by or on behalf of Bank of India (Bank), is provided to the
bidder(s) on the terms and conditions set out in this RFP document and all other
terms and conditions subject to which such information is provided.
This RFP is neither an agreement nor an offer and is only an invitation by Bank to
the interested parties for submission of bids. The purpose of this RFP is to provide
the bidder(s) with information to assist the formulation of their proposals. This RFP
does not claim to contain all the information each bidder may require. Each bidder
should conduct its own investigations and analysis and should check the accuracy,
reliability and completeness of the information in this RFP and where necessary
obtain independent advice. Bank makes no representation or warranty and shall
incur no liability under any law, statute, rules or regulations as to the accuracy,
reliability or completeness of this RFP. Bank may in its absolute discretion, but
without being under any obligation to do so, update, amend or supplement the
information in this RFP.

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1) Introduction:
i.

Bank of India, Union Bank of India and Dai-ichi Life Insurance Co Ltd. of Japan
formed a Joint Venture, named as Star Union Dai-ichi Life Insurance Company
Ltd (Sudlife) to enter into Life Insurance Business in India and the MOUs were
signed amongst the parties. The Sudlife was incorporated on 25.09.2007 with
the Registrar of Companies, Maharastra. The Sudlife was licensed by IRDA on
26.11.2008 for carrying on Life Insurance business in India.

ii.

Presently the share holding of promoters as on 31.03.2015 is as under:

Bank of India
(48%) Rs. 120.00 crore
Union Bank of India
(26%) Rs. 65.00 crore
Dai-ichi Life Insurance Co (26%) Rs. 65.00 crore
TOTAL
Rs. 250.00 crore.
The company is not listed on the stock exchanges.
The face value of the Sudlife equity share is Rs.10.00 each.

iii.

The Government of India since passed the necessary law enabling foreign
investors to hold upto 49% stake in Life Insurance ventures. As per the
Tripartite Agreement executed amongst the investors, Dai-Ichi Life Insurance
Company is now entitled to increase their shareholding by exercising their right
to acquire "Change In Law Call Shares".

2) Proposal:
i.
ii.
iii.

iv.

Bank of India has decided to undertake valuation of "Change In Law Call shares"
of Sudlife.
Valuation methodology should be on an internationally accepted and widely used
valuation methodology for life insurance company.
Accordingly, proposals under the guidelines at para 5 hereunder are invited from
firms of international repute to act as Valuer for determining the value of
"Change In Law Call Shares" of Sudlife. The firms could be a. investment / merchant banker registered with SEBI and having valid licence
as Merchant Banker
b. an Actuary holding a valid membership of Institute of Actuaries of India
c. Chartered Accountant holding valid certificate of practice issued by Institute
of Chartered Accountants of India
The Bank will select and appoint one Appraiser with requisite experience in
valuation of life insurance companies.

3) Responsibilities of the Appraiser:

The Appraiser will be required to undertake tasks as mentioned below:
a. Calculation of the Embedded Value using Traditional Embedded Value (TEV)
approach.
b. Calculation of Structural Value on the basis of the business plan approved by the
Board of Sudlife. Also to determine the Value of one year's New Business (VNB)

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c.
d.

e.
f.

g.

h.

i.
j.

for the 12 months prior to the valuation date and scale this according to the
business plan volumes to determine the Structural Value.
Reviewing cash-flow projection models of existing products developed by SUD
Life for an appropriate proportion of the covered business by constructing
independent models.
Select 3-5 model points for each product reflecting material features of product as
well as inforce business. Obtain relevant cash flows for selected model points
from SUD Life's financial projection model. Build independent models and check
calculations against output from SUD Life's actuarial model.
Calculate the net worth of SUD Life by using asset values provided by SUD Life
for determining the net worth.
Include high level checks on liability data such as ensuring the data used for the
EV calculations is consistent with the data used by SUD for statutory reporting ,
ensuring that policy data includes all information required to value the business
for the material products. In case the high level checks indicate any material
issues, to keep us updated.
Discuss with BOI and/or Sudlife & decide Various assumptions used / to be used for the model of valuation used by
Sudlife
Treatment of business modelled outside the actuarial valuations software
including the margins thereon
Materiality figures
Submission of draft valuation report to Bank of India, within 6 or 7 weeks of
issue of letter of award, which will include details of :
The approach taken in the production of EV, VNB and structural value
A summary of the assumptions used
Detailed findings from the review of assumptions, methodology, model
and results
Components of appraisal value
Presentation to the Evaluation Committee, Bank of India and justify the valuation
and the underlying assumptions and outcomes.
Submission of final valuation report to Bank of India on fair value of the
Company and its equity shares within two weeks from the date of presentation of
draft of valuation report.

4) Eligibility
i.

Bidders should have handled and completed at least 1 valuation assignment

of a life insurance company of Rs.750 crore or more during the last 5
years ending 31stMarch, 2015. Documentary evidence of the aforementioned
eligibility criteria should be duly submitted.

ii.

The interested Bidders fulfilling eligibility criteria mentioned in paragraph 4.i

above are advised to furnish the following certificate as a part of the Proposal:
We certify that there has been no conviction by a Court of Law or
indictment/adverse order by a regulatory authority for a grave offence against us
or any of our sister concern(s)/ associate(s). It is further certified that there is no
investigation pending against us or our sister concern(s)/ associate(s) or the

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CEO, Directors/Managers/ Employees of our concern or of our sister concern(s)/

associate(s). It is certified that no conflict of interest exists (as narrated in
Annexure-I) as on date and if in future such a conflict of interest arises, we will
intimate the same to the Bank of India.
Further, we certify that as on the date we are not advising or acting on behalf of
or associated with any other person or entity (including any company,
partnership, proprietary concern or individual or an HUF or association of persons
or body of individuals) which is engaged in the same line of business as that of
the Company being valued, in respect of any transaction of same nature as the
transaction for which the Bank is proposing to select the Valuer, except for the
list of the mandates, duly signed by us, in the same line of business and for the
same type of transaction, as enclosed.
Further, we certify that we have not been engaged by another stakeholder of
Sudlife for advising or acting on behalf of them for any type of service and we
are not related party to any stakeholder of Sudlife.
Further, we certify and undertake that for a period commencing from the date of
our appointment (if so appointed) as the Valuer till the completion of the
transaction, we shall keep the Bank informed of any mandate/contracts entered
into, to advise or act on behalf of or associate ourselves with, any other person
or entity (including any company, partnership, proprietary concern or individual
or an HUF or association of persons or body of individuals) which is engaged in
the same line of business as that of the Company being valued, in respect of any
transaction of same nature as the transaction in respect of which we have been
appointed as the Valuer.
Note: The certificate should be signed by the authorized signatory of the Bidder.
The content of the certificate must not be changed. Clarification, if any, may be
provided separately.
iii.

The Bidder shall submit an undertaking that in the event of being appointed as
the Valuer, it would keep all information received during the course of
assignment as confidential. The Bidder and any of its employees, directors,
agents or any other person claiming under it will not disclose, publish or reveal or
cause to be disclosed, published or otherwise revealed any of the Confidential
Information received from Bank of India or Company to any other party
whatsoever either in whole or in part for any purpose. Further, the Bidder shall
ensure that the final report of its assessment, as required under paragraph 3,
would be kept confidential and would not be shared with any other party
whatsoever either in whole or in part for any purpose. Any breach of this
confidentiality clause would lead to termination of the assignment and debarment
of the Valuer firm from any assignment with the Bank.

iv.

The Bidder shall also submit their consent to Bank of India to forfeit the deposit
money of Rs.1,00,000/-, in case they fail to complete and submit the valuation
report as per the agreed time schedule.

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5) Submission of Proposal:
i. Proposals have to be submitted as per the following directions:
(a) Envelope 1 (sealed) containing the following:
The application should be accompanied by a demand draft/ pay order of
Rs.1,00,000 (Rs. one lac only) drawn in favour of "Bank of India" payable
at Mumbai (Enclosure-1). This demand draft/pay order will be refunded to
the unsuccessful bidders within a period of 30 days from the date of technical
evaluation.
Certificate, duly signed by the authorized signatory of the bidder as per para
4.ii 4.iii (Enclosure-2);
Certificate in format at Annexure-II (Enclosure-3);
Authority letter authorizing the person of the Bidder to sign the proposal and
other documents (Enclosure-4);
Copy of the valid certificate of Merchant Banker issued by SEBI or Certificate
of Practice of the Chartered Accountant issued by Institute of Chartered
Accountants of India or
Certificate of membership issued by Institute of Actuaries of India
(Enclosure-5);
(b) Envelope 2 (sealed) containing the technical bid as per format in following
paragraph 5.iv, to be opened in the presence of the bidders on 24th Nov, 2015 at
1500 hrs. in Treasury Branch, 7th Floor, Bank of India, Head Office, C-5, G-Block, BKC,
Bandra (E) Mumbai-400051.
(c) Envelope 3 (sealed) containing the Financial Bid, to be opened only after the
presentations of 10 to 15 minutes each and of only those parties who qualify in the
technical bid. The Evaluation Committee would open the Financial Bids of only short
listed Bidders on 26th Nov, 2015 at 3.00 PM in Bank's premises.
The
representatives of the technically qualified bidders, if so desire, may remain present
during the process. Bids with conditionality will be summarily rejected.
ii. The proposal (all three envelopes) can be submitted by 1700 hrs on 21st Nov,
2015 to Treasury Branch, 7th Floor, Bank of India, Head Office, C-5, G-Block, BKC,
Bandra (E) Mumbai-400051 in hard copies in original, duly signed by the authorized
officer of the Bidder. No proposal will be entertained after the appointed time and
date. The Bank will not be responsible for any postal/courier delay. The proposals
received after the appointed time and date will be summarily rejected.
iii. The Bank shall be under no obligation to accept any offer received in response to this
proposal and shall be entitled to reject any or all offers without assigning any reasons
whatsoever. The Bank may abort the entire process at any stage without thereby
incurring any liability to the affected Bidders(s) or any obligation to inform the
affected Bidder(s) of the grounds for Bank's action.

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iv. Proposal Format:

The Proposals are to be submitted in detail indicating a. Experience and Capabilities in handling transactions as Valuer from
1stApril, 2010 to 31stMarch, 2015 furnishing
Profile
of
the
organization with full particulars of the constitution, ownership and business
activities of the prospective Bidder.
b. Details of valuation assignment done for GoI / PSUs / others, with documentary
evidence, including contact details, for verification, if desired, be highlighted
separately in Annexure - III
c. Sector Expertise, Experience and Understanding of Insurance sector
The valuation transactions handled in the area of insurance.
Exhibit strength/expertise in the areas of insurance, if any.
Indicate work done in the areas of insurance- like advisories, studies or
research undertaken.
Research Reports done on the companies operating in areas of insurance.
d. Team Qualification & Manpower Commitment to the Deal
Details of core team that will be handling the proposed Valuation
assignment , their status in the organization, their background,
qualification, experience and present addresses, telephone numbers
office, residence, mobile, e-mail etc. hands-on experience should be
furnished. Similar details in respect of the supervisory team may be
indicated separately.
Details of other professionals who would provide back-up support may also
be indicated separately.
An undertaking is also to be given that if during the process, any of the
core team members is not available only due to resignation, another person
of the similar qualification and experience would be made available with
concurrence of the Bank.
v. The complete information sought above with any additional information considered
necessary by the Bidder as a part of the Proposal, should be sent (maximum of 10
pages in font size 12) to the address mentioned in para 5.ii.
6) Procedure for Selection of the Valuer
i. Qualified interested Bidders, as per paragraph 4 above, would be required to make
a power point presentation of 10 to 15 minutes of their credentials, in the format
prescribed in paragraph 5.iv above, for the proposed transaction, before
Evaluation Committee, Bank of India in HO campus. The Bidder is also required to
indicate brief valuation methodology in the power point presentation to be made
before Evaluation Committee, Bank of India on 24th Nov, 2015 at 15.00 hrs.
ii. The Evaluation Committee would evaluate the Bidders on the criteria mentioned in
paragraph 5.iv above based on the Proposals received and shortlist them for the
purpose of opening of their Financial Bids.

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iii. After the short listing of Bidders based on their proposals, Evaluation Committee
would open the Financial Bids of only short listed Bidders on 26th Nov, 2015 at
3.00 PM in Bank's premises. The short listed bidders, if they so desire, may
remain present at the time of opening of the financial bids.
iv. The bidder quoting the lowest financial bid or L1 would be appointed as Valuer for
the transaction.
v. For any reason if L1 is disqualified subsequent to assignment of valuation, L2 will
be considered for assignment of valuation.
7) Requirements for Financial Bids
i.

The Bidder is required to quote a fee in INR (in a sealed envelope) for the
transaction. The fee quoted by the Bidder should be inclusive of all the applicable
taxes, cess, duties etc. The fee quoted should be in multiples of "Rupees
thousands" failing which the financial bid would be rejected. The different
taxes should be indicated separately while raising the bills for payment of fee. All
bills are to be raised in INR and will be payable in INR only after successful and
satisfactory closure of the transaction.

ii.

The fee quoted should be unconditional and inclusive of the expenditure to be

incurred on the work mentioned in paragraph 3 above.

iii.

The Bidders will be liable to pay taxes applicable as per law.

iv.

The Bidder will be paid the Fee quoted in full, subject to applicable TDS, on
completion and submission of the valuation report. No part payment/advance will
be paid to the bidder.

v.

If the assignment is not completed within the agreed time, the deposit amount
Rs.1,00,000/- will be forfeited and no correspondence will be entertained in this
regard.

8) Termination of the assignment:

In case it is found during the evaluation or at any time before award of the
assignment or after its execution and during the period of subsistence or after the
period thereof, that one or more of the terms and conditions laid down in this
Request for Proposal have not been met by the Bidder, or the Bidder has made
material misrepresentation or has given any materially incorrect or false
information, the Bidder shall be disqualified forthwith if not yet appointed as the
Valuer, and if the Selected Bidder has already been appointed as the Valuer, as the
case may be, the same shall, notwithstanding anything to the contrary contained in
this RFP, be liable to be terminated, by a communication in writing by the Bank to
the Selected Bidder without the Bank being liable in any manner whatsoever to
the Selected Bidder. This action will be without prejudice to any other right or
remedy that may be available to the Bank under the Bidding Documents, or
otherwise.

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9) For any further clarification, contact Shri K.B.N.Rao, AGM, Treasury Branch, Bank of
India, Head Office, Mumbai.
Email.Ho.Treasury@bankofindia.co.in Tel:+91 22
26528840.
Annexure-I
1) The interested parties would be required to submit a list of or disclose any
mandated transactions which are in the same line of business as that of the
company (being disinvested) in respect of any transaction of same nature as the
transaction for which the Bank is proposing to select or have appointed the Valuer
and confirm in writing that there exists no conflict of interest as on the date of
submitting their proposal for appointment/ their appointment as Valuer in handling
of the transaction and that, in future, if such a conflict of interest arises, the Valuer
would immediately intimate the Bank of the same.
2) The Bank shall at its sole discretion after providing due and reasonable opportunity
decide whether such future conflict of interest shall materially adversely affect the
interest of the Bank in relation to the transaction and shall be entitled to grant the
consent to the Valuer to continue as Valuer or terminate the appointment of the
Valuer. For valuation purposes, conflict of interest is defined to include engaging in
any activity or business by the Valuer in association with any third Party, during the
engagement, which would or may be reasonably expected to, directly or indirectly,
materially adversely affect the interest of Bank in relation to the transaction, and in
respect of which the Valuer has or may obtain any proprietary or confidential
information during the engagement, that, if known to any other client of the Valuer,
could be used in any manner by such client to the material disadvantage of the
Bank in the transaction.
3) The conflict of interest would be deemed to have arisen if Valuer in respect of the
transaction is appointed by a third party for advising or acting on behalf of or
associated with any other person or entity (including any company, partnership,
proprietary concern or individual or an HUF or association of persons or body of
individuals) which is engaged in the same line of business as that of the Company
(being valued), in respect of any transaction of same nature as the transaction for
which the Bank is proposing to select or have appointed the Valuer. Further, the
decision of the Bank as to whether such other person or entity is engaged in the
same line of business as that of the Company being valued, shall be final and
binding on the Valuer.
4) The conflict of interest would also be deemed to have arisen if Valuer firm/ concern
has any professional or commercial relationship with any bidding firm/ concern for
the same disinvestment transaction during the pendency of such transaction. In this
context, both Valuer firm and bidding firm would mean distinct and separate legal
entities and would not include their sister concern, group concern or affiliates etc.
The professional or commercial relationship is defined to include acting on behalf of
the bidder or undertaking any assignment for the bidder of any nature, whether or
not directly related to valuation transaction.

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Annexure-II
FORMAT OF UNCONDITIONAL BID ON THE LETTERHEAD OF THE BIDDER
This is to certify that the fee quoted by us for engagement as Valuer for valuation
of Sudilife is in accordance with the terms and conditions [including the
confidentiality clause 4.iii laid down in the Request for Proposal displayed on the
website of the Bank and is unconditional.
It is expressly agreed that any breach of the terms and conditions laid down in this
Request for Proposal, including confidentiality clause 4.iii, would lead to
termination of this assignment and our debarment from any other assignment with
the Bank.
Seal with signatures of authorized signatory of the Bidder.

Annexure-III
DETAILS OF VALUATION TRANSACTIONS EQUAL TO OR GREATER THAN
Rs.750 Crore
Sl.No.
1
2
3
4
5

Name of the Client

Contact Details

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Details of Mandate