Government Plans to Raise Nearly Rs 5,000 crore via ETF by March: Report

New Delhi: The government plans to raise around Rs 5,000 crore ($813.4 million) this fiscal year (2014-15) by selling stakes in companies including ITC, Larsen & Toubro and Axis Bank, a senior official with knowledge of policymakers' discussions said on Wednesday.

 

The sales could be made through an exchange traded fund (ETF) that could be launched before the end of March, the official told Reuters, requesting anonymity as he is not authorised to speak to the media.

 

The ETF would be made up of the government's stakeholding in up to ten companies, including stakes in companies held through an offshoot of the Unit Trust of India known as SUUTI.

 

The government holds an 11.27 per cent in ITC, 8.18 per cent in L&T and 11.66 per cent in Axis Bank through SUUTI.

 

SUUTI, which stands for Specified Undertaking of The Unit Trust of India, said in a statement that it has invited bids from asset management companies to help it set up the ETF.

 

"The size of the ETF could be about 50 billion rupees though the final decision would be taken in consultation with the asset management company," the official said.

 

Last month, Finance Secretary Arvind Mayaram said that the government was considering floating an ETF to sell shares held by SUUTI.

 

Earlier this year, the government sold a 9 per cent stake in Axis Bank to institutional investors.

 

In his maiden budget in July, Finance Minister Arun Jaitley set a target of Rs 58,425 crore ($9.5 billion) to be raised through the sale of shares in state-run companies and minority stakes in private companies.

 

In March, the government raised Rs 4,400 crore through another ETF comprising shares of 10 state-run companies including ONGC, Indian Oil and Coal India.

 

Copyright @ Thomson Reuters 2013