As it tries to shore up much needed revenue, the government on Friday approved plans to set up the long-pending exchange traded fund that would consist of scrips of 11 blue chip public sector units and raise about Rs 3,000 crore in 2013-14.
“The empowered group of ministers met to finalise the basket for PSU ETF. This basket will comprise of 11 companies, all blue chip PSUs. We expect to raise around Rs 3,000 crore,” said Ravi Mathur, disinvestment secretary.
The PSU-ETF, which is expected to be launched within a month, will include stocks of companies including Coal India Ltd, ONGC, GAIL, Power Grid, REC, Oil India Ltd, Container Corporation of India, Power Finance Corp, Indian Oil and Engineers India Ltd.
An exchange traded fund is an investment fund, which is traded on the bourses like shares, and is benchmarked to an index on the stock exchange.
The EGoM, which is headed by finance minister P Chidambaram, is also understood to have finalised the composition of ETF and weightage of the shares of individual PSU in the index.
ONGC would have the highest weightage of 25 per cent with 89 shares in the proposed ETF basket while CIL is expected to have a weightage of 17.21 per cent with 61 shares.
Sources said that retail investors may be given a discount to encourage participation.
The department of disinvestment will now file the necessary documents with market regulator Sebi. Goldman Sachs is acting as the asset management company for the exchange traded fund. The PSU-exchange traded fund is expected to
be an additional channel for the government to raise money through disinvestment proceeds. The government targets to raise Rs 40,000 crore from stake sales this fiscal.
The Cabinet Committee on Economic Affairs had in May last year approved the setting up of the fund “to help in minimising market disruptions seen in public offerings of listed CPSEs; increase ability of the government to monetise partial stakes in listed CPSEs”.
ETFs were introduced in India in 2001. Currently, there are about 33 ETFs having assets under management of close to Rs 11,500 crore and held by 6.2 lakh investors. Gold ETFs dominate ETF market in India.