Govt gets Rs 4,000 cr from ETF, exceeds disinvestment target

The government's first attempt to mop up disinvestment proceeds through the mutual fund route met with encouraging response as the CPSE Exchange Traded Fund (ETF) garnered cumulative bids worth Rs 4,000 crore from investors, including FIIs.

The new fund offer (NFO) of the ETF, which closed Friday, saw Foreign Institutional Investors (FIIs) lap up the scheme pouring in bids of over Rs 1,000 crore alone on the last day.

"The ETF today got Rs 1,600 crore worth bids with FIIs being the highest bidder. Cumulative bids for the NFO stands at over Rs 4,000 crore," a source said.

This would act as booster to government finances. The government was hoping to garner Rs 3,000 crore from the ETF.

The success of the scheme would take the government's receipt from disinvestment this fiscal ending March to over Rs 17,100 crore, higher than the budgeted Rs 16,027 crore.

In the 2014 Interim Budget, the government lowered the PSU stake sale target from Rs 40,000 crore to Rs 16,027 crore.

As many as seven anchor investors, including State Bank of India and insurance companies, had put in Rs 835 crore into the NFO on the first day.

The insurers which have put in 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 government had reserved Rs 900 crore for anchor investors, or those bidding for more than Rs 10 crore of shares.

This is the first attempt of the government to channelise investor money into PSU stocks through the mutual fund route.

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/qualified institutional buyers can invest in the scheme with a minimum investment amount of Rs 10 lakh.

The CPSE ETF basket consist 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 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.

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.