The government will launch the third tranche of CPSE exchange traded funds (ETF) to garner about R2,500 crore on Tuesday. All categories of investors applying for the ETF will get a discount of 3.5%. The second tranche of CPSE ETFs, which opened for subscriptions from January 17 to January 20, was oversubscribed by 2.30 times, with bids worth R13,802 crore pouring in against the issue size of R6,000 crore. The CPSE ETF comprises scrips of 10 PSUs — ONGC, Coal India, IOC, GAIL (India), Oil India, PFC, Bharat Electronics, REC, Engineers India and Container Corporation of India. ETF is a marketable security that tracks a basket of assets such as stocks. Unlike mutual funds, it trades like a stock.
The inaugural issue of the CPSE ETF was launched in 2014 and had raised R4,300 crore. The ETF was managed by Goldman Sachs Asset Management, The second tranche was managed by Reliance Mutual Fund, which operates the ETF after it bought over Goldman Sachs’ mutual fund business in the country in 2015. The government had budgeted to raise R56,500 crore in FY17 through divestments in PSUs and the strategic sale of shares. The target has been revised to R45,500 crore.So far the government has raised R39,368.69 crore through buybacks and stake sale in PSUs, and sale of the government’s holdings ITC and L& T.