With exchange traded fund (ETF) route proving to be the most efficient disinvestment tool in FY19, the Centre will launch the fourth further fund offer (FFO) of the CPSE ETF with a base offer size of `3,500 crore, which will likely be increased depending on investors’ appetite.
The CPSE ETF will likely open for subscription on March 19 and will close on March 22, an official told FE. The Centre could retain additional amount over and above the base size of the latest CPSE ETF issue, depending on oversubscriptions, the official added.
In February, the Centre had raised Rs 10,405 crore or 2.8 times of the base offer size of `3,500 crore as the additional offering of the diversified Bharat-22 ETF received bids over `46,000 crore from investors.
Receipts from three ETF issues stood at Rs 35,730 crore or 63% of the total disinvestment receipts of `56,473 crore so far in FY19. The fourth ETF issue could help the Centre exceed its FY19 disinvestment revenue target of Rs 80,000 crore in FY19.
In November 2018, the Centre had raised Rs 17,000 crore from FFO3 of of the CPSE ETF as against the base offer size of `8,000 crore as retail and institutional investors put in bids worth `30,899 crore. In June 2018, the government had raised Rs 8,325 crore from the second tranche of Bharat 22 ETF issue.
The government’s ETF mop-up this time around would be higher than Rs 14,500 crore in FY18 and Rs 8,500 crore in FY17.
The government reckons that given the volatile market conditions and the low appetite for individual stocks, the ETF route attracts more retail investors.