CPSE ETF's 7th tranche to open on Thursday; govt eyes Rs 10,000 crore

The government is planning to raise at least Rs 10,000 crore through the seventh tranche of CPSE ETF which will open for anchor investors on Thursday.

Central Public Sector Enterprises ETF runs a concentrated portfolio with a handful of stocks having weights of as high as 20 per cent on the underlying index. The portfolio is concentrated towards the energy and oil sector.

The issue will open for anchor investors on Thursday and for other institutional and retail investors, the next day-- Nippon Life India Asset Management-- which has been mandated to manage the CPSE ETF on behalf of the government, said in a statement.

Besides, the investors would get a 3 per cent discount over the issue price, it added.

The sixth FFO (further follow on offer) or seventh tranche will have a base issue size of Rs 10,000 crore with a greenshoe option to retain a portion of the oversubscription.

Retail investors can invest a minimum of Rs 5,000, while non-institutional investors and qualified institutional buyers (other than anchor investors) can invest a minimum of Rs 2 lakh. The minimum investment for anchor investor is fixed at Rs 10 crore.

The decision to launch seventh tranche of CPSE Exchange Traded Fund (ETF) has been taken after receiving robust response for earlier stake sale by the government in the product.

Through the earlier six tranches of the CPSE ETF, the government has already raised about Rs 50,000 crore; Rs 3,000 crore from the first tranche in March 2014, Rs 6,000 crore in January 2017, Rs 2,500 crore from the third in March 2017, Rs 17,000 crore in November 2018 and Rs 10,000 crore in March 2019 and Rs 11,500 crore in July 2019.

Nippon Life India Asset Management, formerly known as Reliance Nippon Life Asset Management, had already filed 'scheme information document' for sixth FFO of CPSE ETF with markets regulator Sebi.

The CPSE ETF tracks shares of 11 CPSEs -- ONGC, NTPC, Coal India, IOC, REC, PFC, Bharat Electronics, Oil India, NBCC India, NLC India and SJVN.

The proceeds from the ETF will help the government meet its disinvestment target of Rs 1.05 lakh crore for the current financial year. It had aimed to garner Rs 85,000 crore through disinvestment in the preceding financial year.