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New ETF to monetise govt stake in listed PSUs, other companies

02:43 PM May 30, 2019 | Free Press Journal Correspondant

New Delhi : The Finance Ministry is planning to launch a new Exchange Traded Fund (ETF) as an additional mechanism to monetise government’s stake in listed PSUs and other companies. The ETF may include government stake in companies held through SUUTI as well as those in which it still has some holding.

The Department of Investment and Public Asset Management (DIPAM) has set the ball rolling for the second ETF and has invited bids from ‘Advisors’ by July 11 to help create and launch the proposed fund.

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The government had launched the first ever Central Public Sector Enterprises or CPSE ETF in March 2014, comprising scrips of 10 PSUs, which had garnered Rs 3,000 crore for the exchequer.

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The government will appoint one advisor for the new CPSE ETF, which will be involved in a three stage process wherein stage-I shall be to help create a new ETF, stage-II shall include to help select an AMC, a Legal Adviser and help launch and manage NFO.

Stage III shall comprise FFO (follow on offer)/Tap and any other subsequent offerings and obligations arising out of NFO (New Fund Offer)/FFO/Tap etc. DIPAM may subsequently appoint Asset Management Companies (AMCs) to act as the provider of the proposed ETF.

Specified Undertaking of UTI (SUUTI), formed in 2003, is an offshoot of erstwhile UTI. It has investments in several unlisted companies. Among the listed entities, SUUTI holds 11.72 % in Axis Bank, 11.27 % in ITC and 8.18 % in L&T.

 In March 2014, the government sold 9 % of its stake in Axis Bank held through SUUTI for over Rs 5,500 crore.  The government has pegged disinvestment target at Rs 56,500 crore for 2015-16. Of this, Rs 36,000 crore is to come from minority stake sale in PSU and Rs 20,500 crore from strategic sale.

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