CPSE exchange-traded fund 2.0 may include Suuti firms

Market players say this will make the ETF more attractive as the exposure would get diversified

The proposed new Central Public Sector Enterprises exchange-traded fund (CPSE ETF) might comprise private companies where the government holds the stake through Specified Undertaking of the Unit Trust of India (Suuti), along with other public sector units. There was speculation that the new ETF might include banks and companies such as Larsen & Toubro, ITC and Axis Bank in which Suuti holds stake the government has all but confirmed the development.

“The proposed new ETF will serve as an additional mechanism for the government to monetise its shareholdings in CPSEs and in other corporate entities,” the centre has said in the request for proposal (RFP) for legal advisors. 

Government holds sizable stake in L&T, ITC and Axis Bank through Suuti and is looking to divest the same in the next three years. Market players say inclusion of Suuti companies will make the ETF more attractive as the exposure would get diversified. Last year, the centre had sold some stake in ITC and L&T to garner around Rs 8,700 crore. 

ICICI Prudential AMC has been given the mandate to manage the ETF. This will be the second EFT product to be launched by the government. The centre had launched its first CPSE ETF in FY14 to raise Rs 3,000 crore. The government had launched second and third tranche of this ETF last fiscal to raise Rs 8,500 crore.