Govt may consider up to Rs 6Kcr greenshoe option in CPSE ETF

The government is considering exercising greenshoe option worth Rs 4,000-6,000 crore in the Central Public Sector Enterprises - Exchange Traded Fund (CPSE ETF FF03) over the base issue size of Rs 8,000 crore.

CPSE ETF, which works like a mutual fund scheme, is an instrument with which the government divests its stake in the CPSEs without hitting the secondary market directly with individual PSUs.

"The base issue size in the fourth round of CPSE ETF issue is Rs 8,000 crore and this time a greenshoe option has been kept which may be between Rs 4,000 crore and Rs 6,000 crore. However, the government is yet to decide on this," Reliance Nippon Life AMC Co-Chief Business Officer Saugata Chatterjee said.

Reliance Nippon Life AMC is the manager of the fourth tranche of the CPSE ETF.

The target amount is the highest compared to the three previous issues of the ETF.

In the new fund offer (NFO) in 2014, the issue size was Rs 3,000 crore, the first Further Fund Offer (FFO1) size was Rs 6,000 crore in January 2017 which was followed by another FFO2 issue in March 2017 that raised just Rs 2,500 crore.

However, there were no over-allotment option due to which the asset management company (AMC) had to refund the excess application.

Discount offer of 4.5 per cent has been decided in this issue against 2.5 per cent in the previous issue of March 2017.

Out Rs 80,000 crore target from divestment in 2018-19, the Centre has been able to achieve only Rs 15,247 crore, latest data showed.

Chatterjee says he is hopeful of large scale participation in the issue that opens for anchor investors on November 27 and for retail investors on November 28 despite liquidity crunch triggered by the IL&FS default.

He said in current issue, the composition has changed where NTPC, SJVN and NBCC made entry while, Concor, EIL Ltd and GAIL made exit.

The total number of stocks now stands at 11 compared to 10 in the earlier three issues.