CPSE ETF: Another round of PSU divestment likely this month; govt looks to raise Rs 8,000 crore

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Updated: November 5, 2018 3:07:00 PM

Through the previous three tranches, the government managed to divest stake in 10 companies and raised Rs 11,000 crore-Rs 3,000 crores in March 2014 in the first tranche, Rs 6,000 crore in the second tranche in January 2017 and Rs 2,500 crore in the third tranche in March 2017.

disinvestment, psu, indian economy, economy, profitable Central Public Sector Enterprises, disinvestment in 2018The CPSE ETF, which was set up in 2014, comprises stocks of 10 blue-chip PSUs.

The Indian government is looking to raise approximately Rs 8,000 crore through the launch of follow-on-offer of state-run companies’ exchange-traded fund, CPSE ETF, by the end of November. Earlier, the government had raised Rs 11,500 crore in three tranches and this would be fourth tranches of CPSE ETF. “We are planning the fourth tranche of the CPSE ETF by November end. The issue will have a green-shoe option for retaining over-subscription, the PTI reported citing an official.

The Ministry of Finance is currently in the process of rejigging the companies in the ETF after the exclusion of three existing CPSEs namely GAIL, Engineers India Ltd (EIL) and Container Corporation from the index as the government’s holding in these three firms dropped below 55%, the official added.

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Given the weightage and scrip value of these three firms, which is at 11.25%, 5.08% and 2.28%, respectively, the finance ministry is planning to include four new CPSEs to keep the CPSE ETF index value at the same level and will add the scrips soon. The new scrips will include MOIL and KIOCL and will take the total number of stocks in the ETF to 11 from the earlier 10.

Last month, Reliance Nippon Asset Management, the fund manager to the ETF, had filed draft scheme information document with capital markets regulator Securities and Exchange Board of India (SEBI) for the fourth tranche of CPSE ETF. ICICI Securities has been appointed as the adviser for the fourth tranche of CPSE ETF.

The CPSE ETF, which was set up in 2014, comprises stocks of 10 blue-chip PSUs, namely Coal India, ONGC, Oil India, IOC, Bharat Electronics PFC, REC, GAIL, EIL and Container Corporation of India.

Through the previous three tranches, the government managed to divest stake in the 10 companies and raised Rs 11,000 crore-Rs 3,000 crores in March 2014 in the first tranche, Rs 6,000 crore in the second tranche in January 2017 and Rs 2,500 crore in the third tranche in March 2017.

In the current financial year, the government has set a target to raise Rs 80,000 crore through disinvestment, and it has already raised Rs 9,000 crore.

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