CPSE ETF 4th tranche: Anchor portion subscribed 5.5 times to Rs 133 bn

Of the total, 65% demand came from FPIs

The fourth tranche of CPSE ETF follow-on offer was lapped up by institutional investors on Tuesday, with the portion reserved for anchor getting subscribed 5.5 times to the tune of Rs 133 billion.

The government has launched the follow-on fund offer (FFO) of CPSE Exchange Traded Fund (ETF), comprising shares of 11 state-run companies, to raise up to Rs 140 billion from the market. Of this, the base issue size is Rs 80 billion and another Rs 60 billion is a green-shoe option.

As much as 30 per cent of total base issue size, or Rs 24 billion, was reserved for anchor investors, who put in bids worth about Rs 133 billion, according to Reliance Nippon Life Asset Management, which is the manager of the fourth tranche of the CPSE ETF.

The issue opened for anchor investors Tuesday and received subscriptions from investors including mutual funds houses, foreign portfolio investors (FPI), insurance and retirement funds.

Of the total, 65 per cent demand came from FPIs.

The FFO will open for subscription for retail and other institutional investors Wednesday and will remain open till November 30.

The government has already raised Rs 115 billion in the earlier three tranches of the CPSE ETF, which functions like a mutual fund scheme.

The Finance Ministry has reconstituted the CPSE ETF by removing three companies -- GAIL, Container Corporation and Engineers India from the basket as the government holding in these companies has fallen below 55 per cent.

These companies have been replaced by four other state-run entities NTPC, SJVN, NLC and NBCC.

With this, the number of companies in the CPSE ETF basket has increased to 11, as against 10 earlier.

The other seven bluechip PSUs in the CPSE ETF are ONGC, Coal India, IOC, Oil India, PFC, REC and Bharat Electronics.

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.

The government has mopped up over Rs 150 billion so far this financial year through PSU disinvestment, which includes about Rs 53 billion from Coal India share sale, Rs 170 billion from IPOs of four PSUs -- RITES, IRCON, MIDHANI and Garden Reach Shipbuilders.

The budgeted target from PSU disinvestment is Rs 800 billion for the current financial year.