Govt to retain Rs 17k cr from CPSE ETF subscription

The government is likely to retain Rs 17,000 crore from the ongoing CPSE ETF follow on offer, as against the original offer size of Rs 14,000 crore, an official said Wednesday.

"We will retain subscription to the tune of Rs 17,000 crore in the follow on fund offer (FFO) of CPSE ETF," the official told PTI.

The government had Tuesday launched the fourth tranche of the CPSE ETF with a base issue size of Rs 8,000 crore. The issue had a green-shoe option to retain additional subscription of Rs 6,000 crore, taking the total issue size to Rs 14,000 crore.

In the first day of the FFO on Tuesday, anchor investors had put in bids for 5.5 times the shares reserved for them, amounting to Rs 13,300 crore.

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

An approval of alternative mechanism, headed by Finance Minister Arun Jaitley, would be required to increase the amount to be raised from FFO of CPSE ETF.

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 10 companies in the basket in 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.

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

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