SUUTI receives 7 bids for ETF fund manager mandate

As government seeks to raise Rs 15,000 crore by sale of residual stakes in ITC, L&T and Axis Bank, it has received seven bids from fund houses for managing an Exchange Traded Fund (ETF) created for this purpose.
The Government of India holds these shares -- 11.27 per cent in ITC, 8.18 per cent in L&T and 11.66 per cent in Axis Bank -- through Specified Undertaking of UTI (SUUTI).
While ICICI Securities has been appointed as advisor for selection of a fund house for managing an ETF for monetising these SUUTI shares, sources said that at least seven bids have been received for the mandate.

The bidders include SBI Mutual Fund, UTI MF, Reliance Asset Management Management, ICICI Prudential MF, Kotak MF, Birla Sun Life MF, and a consortium of Edelweiss and Sundaram Mutual Funds.
The government had sold 9 per cent stake in Axis Bank held through SUUTI in March this year through the bulk deal on the stock exchanges. Formed in 2003, SUUTI is an offshoot of the erstwhile UTI (Unit Trust of India).
The proposed ETF will serve as an additional mechanism for the government to monetise its shareholdings in SUUTI and other selected CPSEs that eventually form part of the ETF basket.

The last date for submitting bids to SUUTI was October 28. According to sources, one fund manager would be selected out of these seven bids.

As per the bid documents, the ETF could be launched as a New Fund Offer (NFO) followed by further tranches and/or a tap structure, and SUUTI and government may provide appropriate discount for different investors, in the form of a suitable mix of upfront and back-end loyalty discount.
The proposed ETF will be launched as a close-ended structure, it said.
In March, the government had successfully launched the ETF comprising shares of 10 PSUs. The ETF has registered handsome gains since its launch.

The government proposes to raise Rs 15,000 crore in the current fiscal through sale of residual stakes in private companies. It plans to raise Rs 43,425 crore through stake sale in PSUs.