tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.
“Ten public sector companies will be part of the CPSE ETF,” finance minister P Chidambaram told reporters after the meeting of the EGoM in New Delhi.
The proposed CPSE ETF will serve as an additional mechanism for the government to monetise its shareholdings in those CPSEs that eventually form part of the ETF basket.The ETF would have a corpus of Rs 3,000 crore, and will be used as a vehicle for the government stake sale in major PSUs, including ONGC, IOC and BHEL.
According to the draft prospectus filed with the Securities and Exchange Board of India (SEBI), individual retail investors can invest a minimum of Rs 5,000, while the upper limit is Rs 10 lakh in the ETF. Non-institutional investors or qualified institutional buyers can invest in the scheme with a minimum investment amount of Rs 10 lakh.
The 10 PSUs in the ETF basket include ONGC, IOC, GAIL, Coal India, REC, Oil India, Container Corporation, Power Finance, Engineers India and Bharat Electronics.
The government has so far raised about Rs 5,093.87 crore through stake sales in PSUs this fiscal. As per the revised estimates in the Interim Budget, the disinvestment target has been lowered to Rs.16,027 crore this financial year from Rs.40,000 crore.
Goldman Sachs is acting as the asset management company for the CPSE ETF.
ETFs were introduced in India in 2001 and there are about 33 ETFs with assets under management of close to Rs.11,500 crore held by 6.20 lakh investors. Gold ETFs dominate the market in India. The surprising omission from the ETF is Power Grid Corporation.
The offer document for CPSE ETF has been filed in the last week of February. Earlier, it was supposed to have 11 PSUs incliding Power Grid. The ETF is expected to hit the markets next month, the official added.
Power Grid was excluded because the scrip has a one-year lock-in period since its follow-on public offer in December.
The EGoM headed by finance minister P Chidambaram in January gave its final nod for floating the CPSE ETF.