An Empowered Group of Ministers (EGoM) met on Monday to give a final shape to the proposed Central public sector enterprises (CPSE) Exchange Traded Fund (ETF), which will comprise shares of 10 blue chip state-owned firms, and solicit retail participation.
“Ten public sector companies will be part of the CPSE ETF,” Finance Minister P. Chidambaram told reporters after the meeting of the EGoM.
Deputy Chairman of Planning Commission Montek Singh Ahluwalia, Commerce and Industry Minister Anand Sharma, and Oil Minister Verappa Moliy also attended the EGoM.
The ETF, which is expected to hit the markets this month, 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.
ETF is a security that tracks an index, a commodity or a basket of assets such as an index fund, but trades like a stock on an exchange.
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 maximum limit is Rs.10 lakh in the ETF. Non-institutional investors/qualified institutional buyers can invest in the scheme with a minimum investment amount of Rs.10 lakh.
Companies in the ETF basket include GAIL, 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. At present, 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.
