In a bid to meet its disinvestment target, the government is planning to raise Rs 8,000 crore through the sixth tranche of CPSE ETF on Jul 18.
In a bid to meet its disinvestment target, the government is planning to raise Rs 8,000 crore through the sixth tranche of CPSE ETF on Jul 18. The government is offering a discount at the rate of Rs 3 per cent on the ‘FFO Reference Market Price’ to the underlying Nifty price index shares. FFO Reference Market Price would be determined based on the average of the full-day volume-weighted average price (VWAP) for each of the constituents of the Nifty CPSE Index on the NSE during the Non-Anchor Investor FFO Period. FFO units will be listed on NSE and BSE on or before Aug 5, according to HDFC Securities.
The Central Public Sector Enterprises (CPSE) Exchange Traded Fund (ETF) was launched by the government in March 2014 as a route for divestment of part of the government’s stake in certain CPSEs. The government has so far sold stake in the 10 companies in the basket in four tranches, raising Rs 38,500 crore so far. It raised Rs 3,000 crore from the first tranche in March 2014, Rs 6,000 crore in January 2017, Rs 2,500 crore from the third in March 2017, Rs 17,000 crore in November 2018 and Rs 10,000 crore in March 2019.
“Units will be allotted at Face Value Rs 10/- per unit + a premium, if any, approximately equal to the difference between the face value and the FFO allotment price. The FFO allotment price would be approximately equal to 1/100th of Nifty CPSE Index and would be calculated post adjusting discount offered by the government to FFO of the Scheme for buying the underlying Nifty CPSE Index shares out of the FFO Proceeds,” HDFC Securities said.
The CPSE ETF constitutes stocks of ten central public sector enterprises namely Indian Oil Corporation Ltd, Coal India Ltd, ONGC, NTPC Ltd, Power Finance Corp, Bharat Electronics, Industrial Capital, Oil India, NBCC, NLC India and SJVN. The has a disinvestment target of Rs 1.05 lakh crore in 2019-20, up from Rs 85,000 crore raised last financial year ending Mar 31.