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Govt eyeing Rs 8,000 cr through CPSE ETF

The finance ministry has plans to rejig companies in the ETF by removing three existing CPSEs and adding four new ones in their place

CPSE ETF
CPSE ETF

New Delhi: The government is looking to raise Rs 8,000 crores through the fourth tranche of the Central Public Sector Enterprises (CPSE) Exchange Traded Fund (ETF) by the end of this month, a source said.

The launch of follow-on public offer is in line with the government’s plan to raise Rs 80,000 crore in the current fiscal through disinvestment of public sector undertakings. The CPSE ETF comprises of 10 bluechip companies. In the earlier three tranches of the ETF, the government had raised Rs 115 billion.

A rejig on the cards

The finance ministry has plans to rejig companies in the ETF by removing three existing CPSEs — GAIL, Engineers India Ltd (EIL) and Container Corporation of India — and adding four new ones in their place. “We are planning the fourth tranche of the CPSE ETF by November end. The issue will have a green-shoe option for retaining over-subscription. The target is to raise around Rs 8,000 crore,” a source said. The ministry, acting through the fund manager of the CPSE ETF, is going to rejig the ETF by including the new scrips soon, he added.

New companies in the bucket

While shares of three CPSEs — GAIL, Engineers India Ltd (EIL) and Container Corporation — will be removed from the index since the government holding in these companies has fallen below 55 per cent, crips of four new CPSEs, including MOIL and KIOCL, will be included in the bucket. This will take the total number of stocks in the ETF to 11.

What is ETF?

The CPSE ETF, which functions like a mutual fund scheme, was set up in 2014 and comprises scrips of 10 bluechip PSUs ONGC, Coal India, IOC, Oil India, PFC, Bharat Electronics, REC, GAIL, EIL and Container Corporation of India. GAIL India, Container Corp and EIL have weightage of 11.25 per cent, 5.08 per cent and 2.28 per cent, respectively, in the CPSE ETF. Since the weightage and scrip value of GAIL, Container Corp and EIL are higher, four new CPSEs have to be included to replace them to keep the CPSE ETF index value at the same level.