The further fund offer of Reliance Mutual Fund’s Central Public Sector Enterprises - Exchange-Traded Fund (CPSE ETF) to raise ₹8,000 crore will open for public subscription between November 28 and 30.
The third follow-on offer is part of the government’s overall disinvestment programme using the ETF route.
Sundeep Sikka, ED and CEO, Reliance Nippon Life Asset Management, said the timing of the issue will help investors benefit from their exposure in a diversified basket such as CPSE ETF that includes a list of distinguished PSUs which are leaders in their respective sectors.
The ETF offers a compelling opportunity for investors, especially retail and retirement funds, to invest in the India growth story at an attractive valuation, low expense and embedded discounts, he said.
The anchor investors’ book will open on November 27.
The third offer of ETF comes with an upfront discount of 4.5 per cent to all categories of investors. The dividend yield of Nifty CPSE index is about 5.25 per cent. The CPSE ETF has a low expense ratio of 0.95 basis points.
Eyeing retirement funds
“We will reach out to retirement funds to invest in this ETF offer for securing their funds and benefit from the growth of these PSUs — some of which are Navratnas, Maharatnas, Miniratnas and are either sector leaders or near monopolies in their respective sectors,” said Sikka.
The CPSE ETF is a passive investment fund that was created to help the government divest stakes in select Central PSEs through the ETF route. The fund invests in Nifty CPSE Index stocks that includes 11 PSU companies selected on the basis of established track record, government holding, market capitalisation, dividend history, sector representation, etc. — in the same proportion and weightage as of the index. For the first time ever, some top power sector companies have been included in the CPSE ETF basket, which now comprises 11 stocks compared to 10 earlier. Making a grand entry into the re-jigged CPSE ETF basket is NTPC (with weightage of 19.6 per cent), along with NLC and SJVN. NBCC is the fourth stock that has now been included in the CPSE ETF index.
The three stocks that have exited are GAIL, Container Corporation of India and Engineers India as the government holding had come down to the specified level. Henceforth, companies will be removed from the CPSE ETF index if government holding falls to 53 per cent against the earlier specified 55 per cent.
The other PSU stocks that continue to form part of the index are ONGC, Coal India, IOC, Oil India, PFC, Bharat Electronics, and REC.
The CPSE ETF new fund offer, FFO and FFO 2, which were done in January and March last year, collected ₹4,363 crore, ₹13,705 crore, and ₹10,083 crore, respectively. .
With inputs from our Delhi Bureau