ICICI Prudential Mutual Fund hired to manage CPSE ETF assets

The proposed new CPSE ETF is estimated to have a corpus of Rs6,000 crore in the first year

ICICI Prudential AMC was managing assets of over Rs2.17 trillion at August-end.
ICICI Prudential AMC was managing assets of over Rs2.17 trillion at August-end.

New Delhi: ICICI Prudential Mutual Fund has been appointed by the government to manage the second Central Public Sector Enterprises (CPSE) exchange traded fund (ETF) comprising public sector undertakings’ (PSUs) stocks in the current fiscal with an estimated corpus of Rs6,000 crore.

The appointment criteria and evaluation process comprises both technical and financial parameters. The other fund houses in the race were Reliance, HDFC, SBI, UTI, Kotak, and Birla Sun Life Mutual Funds, industry sources said.

“The department of investment and public asset management, the ministry of finance, appoints ICICI Prudential Asset Management Company (AMC) for creation and launch of a new ETF,” ICICI Prudential Mutual Fund said in a statement.

The government proposes to create and launch the ETF in addition to the existing CPSE ETF, consisting stocks of listed CPSEs and the Central government’s stake in other corporate entities.

The government had launched the first-ever CPSE ETF, comprising 10 PSUs’ scrips, in March 2014, under which retail investors have to invest a minimum of Rs5,000 to buy units. It had then garnered Rs3,000 crore for the exchequer. The mandate for managing the first CPSE ETF was given to Goldman Sachs Mutual Fund, which has since been acquired by Reliance Mutual Fund.

“The appointment of ICICI Prudential AMC as an asset manager for the ETF mandate is an important milestone for us. We have been considered as a trustworthy asset manager by domestic investors as well as foreign institutional clients in the active management space and are building on our current position in the ETF segment,” ICICI Prudential AMC managing director and chief executive officer, Nimesh Shah, said.

ICICI Prudential AMC is the country’s largest mutual fund house, having an asset under management of over Rs2.17 trillion at August-end.

The proposed new ETF will serve as an additional mechanism for the government to monetise its shareholdings in those CPSEs that eventually are part of the ETF basket. It is estimated to have a corpus of Rs6,000 crore in the first year, which may go up in coming years, sources said.

The mandate for managing the fund is being given for three years. The ETF could be launched as a New Fund Offer (NFO) followed by Further Fund Offer (FFO)/tap mechanism/tranche or in other additional offering which the government may deem fit to launch.

“The government may provide appropriate discount for different investors, in the form of a suitable mix of upfront and back-end loyalty discount,” the finance ministry had said while inviting bids from fund houses.

Securities and Exchange Board of India (Sebi)-registered mutual funds with at least five years of experience of fund management were eligible to place their bids.

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