CPSE ETF set to include shares of 11 companies
The finance ministry, along with investment bankers, is currently in the process of rebalancing the ETF; new index likely to be ready by October
New Delhi: The new index of the CPSE Exchange Trade Fund (ETF) is likely to have shares of 11 state-owned companies, against the current 10, an official said.
The finance ministry, along with investment bankers, was in the process of rebalancing the ETF, and the new index would be ready by October, the official added.
Shares of three central public sector enterprises (CPSEs) — GAIL, Engineers India Ltd (EIL) and Container Corporation — will be removed from the index since the government holding in these companies has fallen below 55%. These stocks would be replaced by scrips of four new CPSEs, including KIOCL, taking their total number in the ETF to 11.
The government currently owns 99% in KIOCL (formerly Kudremukh Iron Ore Company Ltd).
The CPSE ETF, which functions like a mutual fund scheme, comprises scrips of 10 blue-chip PSUs — ONGC, Coal India, IOC, Oil India, PFC, Bharat Electronics, REC, GAIL, EIL and Container Corporation of India. GAIL India, Container Corp and EIL have a weightage of 11.25%, 5.08% and 2.28%, respectively, in the CPSE ETF.
Since the weightage and scrip value of GAIL, Container Corp and EIL are higher, four new CPSEs will be included to replace them to keep the CPSE ETF index value at the same level.
“The new index should be ready by October, after which the government would launch the fourth tranche of follow-on-offer of the ETF,” the official added.
The CPSE ETF was set up in 2014 and the government had so far sold stake in the 10 companies in the basket in three tranches, raising Rs 11,500 crore. The government currently holds 53.34%, 54.80% and 52.02% stakes in GAIL, Container Corp and EIL, respectively.
When the CPSE ETF was set up, a limit was fixed so that stake sales could take place till the government holding in the 10 constituent companies reached 55%. Since the government holding in these three CPSEs have fallen below 55%, new scrips have to be included to replace them.
ICICI Securities has been appointed as adviser for the fourth tranche of the ETF.
Through the three tranches of the CPSE ETF, the government has already raised Rs 11,500 crore — Rs 3,000 crore from the first tranche in March 2014; Rs 6,000 crore in January 2017 and Rs 2,500 crore from the third in March 2017.
The government is eyeing Rs 80,000 crore from disinvestment in the current fiscal. It has mopped up over Rs 9,000 crore so far.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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