Finance Ministry to re-balance CPSE ETF, may include new state-run firms

The finance ministry is likely to rework the constituents of the CPSE Exchange Traded Fund (ETF) by either including new state-run companies or trimming the government holding threshold for existing ones to 52 per cent.

The CPSE ETF comprises 10 state-owned bluechips and shares in these companies can be sold only till the government stake in them reaches 55 per cent.

"Since most of the CPSEs in the basket have reached or are about to reach the threshold limit of 55 per cent, there is a need to rebalance the constituents of CPSE ETF, an official told PTI.

The ministry is in the process of appointing advisors for coming out with the 4th tranche of the CPSE ETF. ICICI Securities and SMC Capitals have bid for becoming the adviser for the Exchange Traded Fund.

The official said the adviser will draw up plan on whether new Central Public Sector Enterprises (CPSE) should be included in the ETF basket or threshold limit for existing CPSEs be brought down to 52 per cent.

On lowering the threshold, the official said however that if this option is exercised, it would leave little headroom for these CPSEs to go in for further stake sales or buy back offers.

A final call would be taken by the inter-ministerial panel, chaired by the Union Finance Minister.

CPSE ETF, which functions like a mutual fund scheme, comprises scrips of 10 PSUs ONGC, Coal India, IOC, GAIL (India), Oil India, PFC, Bharat Electronics, REC, Engineers India and Container Corporation of India.

Through the three tranches of CPSE ETF, the government has already raised Rs 115 billion -- Rs 30 billion from the first tranche in March 2014; Rs 60 billion from the second tranche in January 2017 and Rs 25 billion from the third tranche in March 2017.

The government has budgeted to raise Rs 800 billion through disinvestment in the current fiscal. It has already mopped up Rs 90 billion in the April-July period.