FinMin rejigs CPSE ETF, includes NTPC, 3 other PSUs; eyes Rs 80 bn via FPOs

The finance ministry has rejigged the CPSE Exchange Traded Fund (ETF) and included in the basket the scrips of four state-owned companies NTPC, SJVN, NLC and NBCC, an official said.

The ministry has removed three of the existing companies GAIL, Engineers India Ltd (EIL) and Container Corporation of India in the ETF basket and has replaced them with four new companies.

"NTPC, SJVN, NLC and NBCC have been included in the CPSE ETF, while GAIL, EIL and Container Corporation removed from the basket. CPSE ETF now has scrips of 11 state-owned companies as against 10 earlier," an official told PTI.

The ministry is planning to launch the follow-on public offer of CPSE exchange-traded fund (ETF) by the end of this month and is eyeing about Rs 80 billion as sale proceeds, the official added.

The other seven bluechip PSUs in the CPSE ETF are ONGC, Coal India, IOC, Oil India, PFC, REC and Bharat Electronics. An ETF functions like a mutual fund scheme.

The ministry has already raised Rs 115 billion through three tranches of the CPSE ETF, and a fourth tranche is being planned by the end of this month.

"The ministry, acting through the fund manager of the CPSE ETF, has rebalanced the CPSE ETF by including 4 new scrips," the official added.

Three CPSEs GAIL, Engineers India Ltd (EIL) and Container Corporation has been removed from the index since the government holding in these companies has fallen below 55 per cent.

Since the weightage and scrip value of GAIL, Container Corp and EIL were higher, four new CPSEs had to be included in the ETF to replace them to keep the CPSE ETF index value at the same level, the official explained.

CPSE ETF was set up in 2014 and the government has so far sold stake in the 10 companies in the basket in three tranches, thereby raising Rs 115 billion-- Rs 30 billion from the first tranche in March 2014, Rs 60 billion in January 2017 and Rs 25 billion from the third in March 2017.

In June 2018, the government raised about Rs 84 billion through follow-on offer of another exchange traded fund -- Bharat 22 ETF, which comprises shares of 22 companies, including banks.

The government has raised over Rs 150 billion so far this fiscal through PSU disinvestment, which includes about Rs 53 billion from Coal India share sale, Rs 17 billion from IPOs of four PSUs -- RITES, IRCON, MIDHANI and Garden Reach Shipbuilders.

The budgeted target from PSU disinvestment in current fiscal is Rs 800 billion.