ETF of 10 PSUs on Tue; to help govt meet disinvestment target

Exchange Traded Fund is likely to garner around Rs 3,000 crore through a new fund offer

With the launch of much-awaited CPSE-ETF on Tuesday, the government is expected to meet the lowered disinvestment target of Rs 16,027 crore for the current fiscal ending March 31.

The Exchange Traded Fund (ETF) is likely to garner around Rs 3,000 crore - which will accrue to the exchequer - through a new fund offer.

The NFO for the portion reserved for anchor investors in the CPSE-ETF - around Rs 900 crore - will open on March 18. About Rs 2,100 crore will be raised from other investors for which the NFO will open on March 19.

So far, the government has raised about Rs 13,119 crore from disinvestment this fiscal. On Friday, the government raised Rs 5,340 crore by selling 10% stake in Oil India Ltd (OIL) to state-owned firms ONGC.

Earlier this month, Life Insurance Corporation has bought government's 5.94% stake in power equipment maker Bhel for Rs 2,685 crore.

As per the revised estimates in the Interim Budget 2014, the disinvestment target was lowered to Rs 16,027 crore in this financial year from Rs 40,000 crore.

Premier stock exchange NSE will launch on March 18 the CPSE Index in order to facilitate the government disinvest some of its stake in as many as 10 blue-chip public sector enterprises.

The 10 major CPSEs (Central Public Sector Enterprises) that will form part of the new index are: Coal India, GAIL (India), Oil & Natural Gas Corporation, Indian Oil Corporation, Bharat Electronics, Oil India, Power Finance Corporation, Rural Electrification Corporation, Container Corporation of India and Engineers India.

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.

"The CPSE ETF based on the CPSE Index will give investors an opportunity of cost-efficient investment in blue-chip public sector companies across sectors," NSE said.

The base date for the CPSE index has been fixed as January 1, 2009, and it has a base value of 1,000.

"The weights of index constituents shall be re-aligned every quarter," NSE said.

All the companies part of the CPSE index are listed on the NSE. The index has been constructed by India Index Services & Products.

Exchange traded funds have grown tremendously in the last few years in India, and assets under management have gone up from Rs 1,396 crore in March 2009 to Rs 11,807 crore in September 2013.