Keen to maximise its proceeds from stake sales, the government is planning to re-use the option of exchange traded funds of central public sector enterprises (CPSE-ETF) to raise about Rs 5,000 crore this fiscal and will provide more incentives to retail investors.
“The approvals for the CPSE-ETF are all in place and we will be using it again this fiscal to raise an additional Rs 5,000 crore,” said a senior finance ministry official.
Goldman Sachs Asset Management, which manages the CPSE-ETF is understood to have finalised the modalities of the fund. “Based on the advice of the fund manager, we will go ahead with the ETF,” said the official.
While no fresh PSUs can be added to the CPSE-ETF basket, the official said that efforts are on to make it a more friendly product for retail investors. “Discussions are on over what kind of incentives can be provided to individual investors,” he said.
Exchange traded funds of central public sector enterprises were launched in March last year consisting of shares of 10 PSUs including ONGC, Gail, Coal India Ltd, Rural Electrification Corporation Ltd and Indian Oil Corporation Ltd. It raised Rs 3,000 crore for the Centre in 2013-14.
The option of the CPSE-ETF is now being used as the disinvestment programme of the government has not really taken off in 2014-15. Till date, the Centre has just raised Rs 1,725 crore from the 5 per cent stake sale in Steel Authority of India Ltd as compared with a target of Rs 43,425 crore from stake sale proceeds in 2014-15.
While approving the launch of the ETF, the Union cabinet had last year approved for another tap from the ETF, meaning that the government did not require fresh approvals. The CPSE ETF is an index scheme listed on the stock exchange in the form of an ETF, which tracks the CPSE Index.