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ETF of PSUs to hit the market in a month


ETF of PSUs to hit the market in a month
On Friday, an Empowered Group of Minister's (EGoM) approved a proposal from the Finance Ministry for launching an Exchange Traded Fund (ETF) of PSUs for divestment or stake-sale in central public sector enterprises. The fund manager or the asset management company for the fund will be Goldman Sachs.


Objective of the fund

The main objective of the proposed CPSE-ETF to be launched in a month's time is to enable the government to mop up approximately Rs 3,000 crore by the end of the current fiscal 2013-14. The government plans to mobilize a total of Rs. 40,000 crore by stake sale in PSUs in the current fiscal to bridge the fiscal deficit.

PSUs to form part of the CPSE-ETF

The 11 blue-chip companies that will form the part of the proposed CPSE-ETF include Oil and Natural Gas Corp. Ltd. (ONGC), Indian Oil Corporation Ltd. (IOC), Coal India Ltd., GAIL India Ltd., Power Grid Corporation of India Ltd., Oil India Ltd., Rural Electrification Corp. Ltd. (REC), Container Corporation of India Ltd., Power Finance Corp. Ltd., McNally Bharat Engineering Co. Ltd. and Engineers India Ltd.

Nature of the fund and weightage of different PSUs in CPSE-ETF

The CPSE-ETF to serve as an alternate to direct share sale in PSUs will be an open-ended scheme. The fund will be listed on the exchange and can be traded like any other stock on the stock exchanges. In the CPSE-ETF basket, with as many as 89 shares, ONGC will have the maximum weightage of 25% while with 61 shares Coal India will have the weightage equivalent to 17.21%.

CPSE-ETF to be launched in a month

On the likely timing of the launch of the CPSE-ETF, Ravi Mathur, Disinvestment Secretary stated that a draft prospectus concerning the ETF will be filed with the SEBI and upon its approval, the fund will be introduced in the market.

Story first published: Saturday, January 11, 2014, 11:03 [IST]
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