)
The finance ministry is going to use the Central Public Sector Enterprises (CPSE) exchange-traded fund (ETF), successfully listed on exchanges in the beginning of this financial year, to further dilute the government’s holding in the constituent state-owned companies, Business Standard has learnt.
The ETF, managed by Goldman Sachs Asset Management, raised around Rs 4,000 crore for the government. But since it was a close-ended fund with a limit of Rs 3,000 crore, the remaining Rs 1,000 crore was returned to investors.
The constituent firms of the fund are Coal India, Oil and Natural Gas Corporation (ONGC), GAIL, Rural Electrification Corp, Power Finance Corp, Container Corp of India, Indian Oil, Oil India, Bharat Electronics and Engineers India.
Of these, the largest are ONGC, with a 23.62 per cent weight, Coal India (17.18 per cent), and GAIL (16.81 per cent). The other companies’ weights range between one per cent and 8.5 per cent.
An ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. The biggest advantage is that it provides diversification to investors and is cheaper than investing in a fund. The brokerage fees are the same as trading in an individual stock. An open-ended ETF has no upper investment limit but a closed one has.
Listed on April 4 last year, the CPSE ETF reached a 52-week high of Rs 27.95 per unit on April 9. It closed at Rs 24.32 a unit on Tuesday.
“The government will use the ETF to sell further stakes in the companies that are part of it,” said a senior government official, who did not wish to be named. The person, however, added that no plans had been firmed up to increase the number of constituents or to launch a new CPSE ETF.
Officials say while the larger stake sales of the constituents might not happen through the ETF route, smaller disinvestments in terms of stake or the value of shares might take place through this platform.
