CPSE ETF oversubscribed, fetches bids worth Rs 4,000 cr

The government's first attempt to mop up disinvestment proceeds through the mutual fund route sailed smoothly with the CPSE Exchange Traded Fund (ETF) garnering cumulative bids worth Rs 4,000 crore from investors, including FIIs.
The new fund offer (NFO) of the ETF, which closed today, saw Foreign Institutional Investors (FIIs) lap up the scheme pouring in bids of over Rs 1,000 crore alone on the last day.
The ETF today got Rs 1,600 crore worth bids with FIIs being the highest bidder. Cumulative bids for the NFO stands at over Rs 4,000 crore, a source said.
"Every retail investor who has bid for the ETF will get some allotment. The remaining will be alloted proportionately to QIBs and non-institutional bidders," the source added.

The government was expecting to garner Rs 3,000 crore from the ETF. The government would refund the Rs 1,000 crore over subscription.
The success of the PSU ETF takes the government's proceeds for the current fiscal to Rs 16,119 crore, a tad higher than budgeted Rs 16,027 crore.

In the 2014 interim Budget, the government lowered the PSU stake sale target from Rs 40,000 crore to Rs 16,027 crore.
As many as seven anchor investors, including State Bank of India and insurance companies, had put in Rs 835 crore into the NFO on the first day.
The insurers which have put in money in the ETF are LIC, Bharti Axa Life, General Insurance Corporation of India, National Insurance Company, The New India Assurance and United India Insurance.

The government had reserved Rs 900 crore for anchor investors, or those bidding for more than Rs 10 crore of shares.
This is the first attempt of the government to channelise investor money into PSU stocks through the mutual fund route.
The fund is managed by Goldman Sachs and will be listed on the stock exchanges in the form of an ETF.
"We are delighted with the overwhelming investor response to the CPSE ETF....Being pioneers of ETF in India we are happy that the concept has resonated with all categories of investors," said Sanjiv Shah CEO Goldman Sachs Asset Management (India).

The CPSE ETF basket consists of shares of 10 PSUs and provides an opportunity for investors to become part-owners of Oil & Natural Gas Corp, GAIL India, Coal India, Indian Oil, Oil India, Power Finance Corp, Rural Electrification Corp, Container Corp, Engineers India and Bharat Electronics.
An ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.