Govt gets Rs 17,000 cr from CPSE ETF follow-on offer

The government has garnered more than Rs 17,000 crore from the CPSE ETF follow-on offer, the biggest-ever fundraising from an exchange-traded fund domestically.

The follow-on fund offer (FFO) of CPSE ETF, which closed Friday, got subscription worth Rs 20,000 crore, against the total issue size of Rs 14,000 crore.

The government hit the markets with the fourth tranche of CPSE ETF on November 27. Anchor investors put in bids worth Rs 13,300 crore, which was 5.5 times the shares reserved for them, on the first day of the issue.

"About Rs 20,000 crore worth of subscription has come in. We will retain a little over Rs 17,000 crore from the CPSE ETF FFO," an official told PTI.

The CPSE ETF had a base issue size of Rs 8,000 crore, with a green-shoe option to retain additional subscription of Rs 6,000 crore. The total issue size was Rs 14,000 crore.

The official said there was a scope for retaining more oversubscription, but that could have meant that government stake in some CPSEs falling to 53 per cent.

"Huge investments have come in from pension funds and domestic institutions like mutual funds, although large investors like LIC and EPFO's subscription was not significant," the official added.

The CPSE ETF comprises shares of the 11 state-run companies, including ONGC, Coal India, IOC, Oil India, PFC, REC, Bharat Electronics.

NTPC, SJVN, NLC and NBCC are the new entrants in the ETF basket.

CPSE ETF was set up in 2014 and the government has, so far, sold stake in the basket through three tranches, thereby raising Rs 11,500 crore -- Rs 3,000 crore from the first tranche in March 2014, Rs 6,000 crore in January 2017 and Rs 2,500 crore from the third in March 2017.

Through the two tranches of Bharat-22 ETF, the government had mopped up Rs 14,500 crore in November 2017, and Rs 8,400 crore in June 2018.

The government mopped up over Rs 15,000 crore this fiscal through PSU disinvestment, which includes about Rs 5,300 crore from Coal India share sale, Rs 1,700 crore from initial public offerings of four PSUs -- RITES, IRCON, MIDHANI and Garden Reach Shipbuilders.

The budgeted target from PSU disinvestment is Rs 80,000 crore for the current financial year.