CPSE ETF oversubscribed with bids of over Rs3,150 cr
22 March 2014
The government's new fund-raising option, the CPSE Exchange Traded Fund (ETF), has so far received bids of over Rs3,150 crore and the new fund option of Rs3,000 crore has been fully subscribed, with foreign funds alone investing Rs750 crore.
The final subscriptions could be much higher considering the interest of foreign funds that are looking for a pie in the star performers among government undertakings.
Against the target of Rs3,000 crore, cumulative bids for the fund stood at over Rs3,150 crore on the last day of offer today.
As many as seven anchor investors, including State Bank of India and insurance companies, including Life Insurance Corporation of India, Bharti Axa Life, General Insurance Corporation of India, National Insurance Company, The New India Assurance and United India Insurance, have already put in Rs835 crore into the NFO.
The government had reserved Rs900 crore for anchor investors bidding for more than Rs10 crore worth of shares.
The CPSE ETF basket consists of shares of 10 PSUs and provides an opportunity for investors to become part-owners of Oil & Natural Gas Corp, GAIL India, Coal India, Indian Oil Corporation, Oil India Ltd, Power Finance Corp, Rural Electrification Corp, Container Corp, Engineers India and Bharat Electronics.
As per the offer document filed with market regulator SEBI, individual investors can invest a minimum of Rs5,000, while the maximum of Rs10 lakh for investment in CPSE ETF.
Non-institutional investors / qualified institutional buyers can invest in the scheme with a minimum amount of Rs10 lakh.
The fund is managed by Goldman Sachs and will be listed on the stock exchanges in the form of an ETF. The ETF is an open-ended fund and the units have a face value of Rs10 each.
The government has raised about Rs13,119 crore from disinvestment so far in this financial year. It raised another Rs5,736 cr through sale of 9 per cent stake in Axis Bank by the Specified Undertaking of Unit Trust of India besides the Rs3,000 crore raised by the CPSE ETF. This takes the current year divestment by the government to well over Rs20,000 crore, against the revised disinvestment target of Rs16,027 crore.
In the interim Budget for 2014-15, the government lowered the PSU stake sale target from Rs40,000 crore to Rs16,027 crore.
An 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.
Assets under management of ETFs in India have gone up to Rs11,807 crore in September 2013 from Rs1,396 crore in March 2009.