CPSE ETF offer size to be scaled up to Rs 17,000 crore

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New Delhi | Published: November 29, 2018 2:03:49 AM

With investors giving a thumbs-up on the first day of the further fund offer (FFO) of the CPSE ETF on Tuesday, the Centre plans to more than double the offer size to Rs 17,000 crore.

CPSE ETF offer size to be scaled up to Rs 17,000 crore

With investors giving a thumbs-up on the first day of the further fund offer (FFO) of the CPSE ETF on Tuesday, the Centre plans to more than double the offer size to Rs 17,000 crore. The base offer size of FFO3 of the ETF was Rs 8,000 crore. “Given the track record of investor response to previous ETF issues, the bids for the FFO3 of the CPSE ETF will go up further,” an official told FE.

On Tuesday, anchor investors had put in bids for 5.5 times of the shares reserved for them, amounting to Rs 13,300 crore. The issue was open for subscription for non-anchor investors from Wednesday to Friday and officials are hopeful of good response from pension funds and retail investors as well. The FFO3 of the ETF has an open-ended green-shoe option to retain over-subscriptions, the official said.

Retaining more over-subscription means that the government stake in some PSUs could fall to below 53%, the threshold for government holding in the firms in the ETF basket. However, an official said it won’t be a problem to revise the rules as Cabinet has already approved that government holding in general can come down to 51% in PSUs.

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If the goal is achieved, the ETF mop-up this time around would be highest than the previous ETF (Bharat 22) which fetched Rs 14,500 crore for the government in FY18. The government reckons that given the volatile market conditions and the low appetite for individual stocks, the ETF route may lure more retail investors.

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