CPSE Exchange Traded Fund (ETF) has so far garnered cumulative bids of over Rs. 3,150 crore, buoyed by strong demand from foreign institutional investors.
The final subscriptions, however, will go up as the issue will close later in the day. According to sources, the New Fund Offer (NFO) has been fully subscribed with foreign institutional investors (FIIs) putting in Rs. 750 crore alone so far on the fourth day of offer.
The strong demand has taken the cumulative bids to over Rs. 3,150 crore so far on the last day of offer on Friday.
The government had targeted to garner Rs. 3,000 crore from the ETF.
As many as seven anchor investors, including State Bank of India and insurance companies, have already put in Rs. 835 crore into the NFO.
The insurers that have put money in the ETF are LIC, Bharti Axa Life, General Insurance Corporation of India, National Insurance Company, The New India Assurance and United India Insurance.
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, Oil India, Power Finance Corp, Rural Electrification Corp, Container Corp, Engineers India and Bharat Electronics.
The government had reserved Rs. 900 crore for anchor investors, or those bidding for more than Rs. 10 crore of shares.
As per the offer document filed with market regulator SEBI, individual investors can invest a minimum of Rs. 5,000, while the maximum limit is Rs. 10 lakh for investment in CPSE ETF.
Non-institutional investors or qualified institutional buyers can invest in the scheme with a minimum investment amount of Rs. 10 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 Rs. 10 each. The government has raised about Rs. 13,119 crore from disinvestment so far in this financial year. A successful subscription of the ETF would help the exchequer get richer by Rs. 3,000 crore.
This would help the government meet the revised disinvestment target of Rs. 16,027 crore. In the interim Budget for 2014-15, the government lowered the PSU stake sale target from Rs. 40,000 crore to Rs. 16,027 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 Rs. 11,807 crore in September 2013 from Rs. 1,396 crore in March 2009.