The government has decided to form an exchange-traded fund (ETF) comprising stocks of 11 blue chip state-owned firms, that will be offered in the market with a view to garnering Rs 3,000 crore this fiscal year (FY14).
"This EGoM was to finalise the basket for PSU ETF. This basket will comprise of 11 companies, all bluechip PSUs. We expect to raise around Rs 3,000 crore," Disinvestment Secretary Ravi Mathur told reporters here.
The companies which would form part of the ETF basket are: ONGC, Coal India, GAIL, Power Grid, REC, Oil India, Container Corporation, Power Finance, Indian Oil, Engineers India and Bharat Engineering.
The Empowered Group of Ministers, headed by Finance Minister P Chidambaram, on Friday decided on the formation of the CPSE ETF.
The Department of Disinvestment (DoD) will now file the necessary documents with market regulator Securities and Exchange Board of India (Sebi) and the ETF would be launched within a month, Mr Mathur said.
The CPSE ETF would help the government to add to the disinvestment kitty. The government targeted to raise Rs 40,000 crore from disinvestment this fiscal year but has so far raised only Rs 3,000 crore through PSU stake sale. Last year the Cabinet had approved the setting up of a CPSE ETF.
The PSU ETF would comprise shares of various profitable state-owned companies. The composition of ETF and weightage of the shares of individual PSU in the index has been decided by the EGoM.
ONGC would have the highest weightage of 25 per cent with 89 shares in the proposed ETF basket. Coal India would have a weightage of 17.21 per cent with 61 shares, according to sources.
Goldman Sachs is acting as the asset management company for the ETF.
"The proposed CPSE ETF will serve as an additional mechanism for the government to monetise its shareholdings in those CPSEs that eventually form part of the ETF basket," the government had said.
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.
ETFs were introduced in India in 2001. At present, 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 segment market in India.