To achieve the stiff target set for disinvestment proceeds, the Finance Ministry is planning an exchange traded fund (ETF) of shares of Central public sector units.
The Department of Investment and Public Asset Management (DIPAM) has invited applications for advisers and legal firms for the proposed ETF, which is expected to help raise at least ₹6,000 crore.
“This is the thinking as of now as share sales have been cleared in a number of firms. If required, the fund-raising through ETF can be increased,” said a person familiar with the development.
Sources said the ETF could include shares of listed PSUs as well as some government stake in companies held through SUUTI.
“The proposed new ETF is in addition to the existing CPSE-ETF launched in March 2014,” said DIPAM in a request for proposal, adding that it can be launched as a new fund offer, followed by further fund offer, a tap mechanism or a tranche.
Interested entities are expected to submit their bids by May 9.
The ETF may, however, be launched later in the year.
The adviser would be expected to examine all options for disinvestment of listed PSUs and other corporate entities through ETFs, the feasibility of a new fund as well as that of creating a new ETF index.
Last year, DIPAM had appointed ICICI Prudential Asset Management Company as the asset management company for the ETF; it will continue its role this fiscal.
A PSU-ETF is an index scheme that is listed on the stock exchanges and tracks the CPSE index.
The Finance Ministry had launched the first PSU-ETF in March 2014, which had helped raise ₹3,000 crore.
In 2016-17, it had launched two ETF offers, which helped raise nearly ₹8,500 crore.
The new ETF is also expected to help meet the ambitious disinvestment target of ₹72,500 crore this fiscal, of which ₹46,500 crore is expected from minority stake sales.DIPAM strategy
DIPAM has been working on a strategy, including listing of PSUs as well as general insurers, follow-on offers and share buybacks of state-owned firms to meet the target.
It raised about ₹1,200 crore from a 9.2 per cent stake sale in National Aluminium Company Ltd (Nalco) last week.