Alternative mechanism to finalise CPSE ETF pricing,composition

The Cabinet today permitted the group of ministers on disinvestment, headed by Finance Minister Arun Jaitley, to decide on the pricing of CPSE ETFs and their composition, like inclusion of shares of listed financial institutions.
The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, today authorised the alternative mechanism to decide on inclusion of stocks of listed insurance companies and banks, an official statement said.
Under the 'alternative mechanism' for disinvestment, the group that includes the Finance Minister, Road Transport Minister Nitin Gadkari and the concerned administrative minister, so far decided on quantum of minority stake sale in PSUs.

The CCEA today permitted the 'alternative mechanism' to take decision for divestment of listed CPSEs through Exchange Traded Funds (ETFs), subject to government retaining 51 per cent in these CPSEs.
It has also been authorised to take decision on the disinvestment in respect of public sector banks and listed insurance companies and other listed public sector financial institutions through ETF or other methods subject to government retaining 52 per cent, the statement said.
The 'alternative mechanism' will also clear modalities for divestment through ETF like constitution of portfolio, the price/net asset value at which share of listed companies forming the ETF basket will be divested.

It will also decide on the incentive structure for investors like upfront discount, loyalty bonus and any other aspect of pricing and the mode of disinvestment as required to be taken by the government.

The CCEA had in January cleared Alternative Mechanism for disinvestment in Central Public Sector Undertaking (CPSE) on a case by case basis, subject to government retaining 51 per cent equity and management control.
The CCEA today also gave nod for sale of 51.11 per cent government stake in Hindustan Petroleum Corp Ltd (HPCL) to India's largest oil producer ONGC.
So far in the current fiscal, the government has already raised about Rs 7,000 crore through share sale in four companies. Of this, Rs 1,207 crore have come from initial public offering of Hudco in May and Rs 1,192 crore through Nalco OFS in April and Rs 203 crore through RCF OFS in June.

Besides, around Rs 4,200 crore have been raised through stake sale in L&T held through Specified Undertaking of Unit Trust of India (SUUTI) last month.
The government has budgeted to raise Rs 72,500 crore through stake sale in PSUs.