The sixth tranche of the Central Public Sector Enterprise Exchange-Traded Fund (FFO5) will hit the market next week with the base issue size offer of ₹8,000 crore.
For anchor investors, the issue will open and close on July 18. For non-anchor investors, the issue will open and close on July 19, sources said.
This will be the first tranche of the CPSE ETF after the Modi 2.0 government assumed office and also the first on post Budget. The Centre has, for the current fiscal, pegged the disinvestment target at ₹1.05-lakh crore.
Reliance Nippon Life Asset Management (RNAM) will manage this sixth tranche of the CPSE ETF as well.
It may be recalled that CPSE ETF since its NFO in March 2014 and subsequent five tranches had raised ₹38,500 crore and attracted 8.76 lakh investors via RNAM’s distribution and network.
The CPSE ETF has been attractive because the dividend yield of the CPSE ETF index is over 5 per cent.
Also, the CPSE ETF is IRDAI-compliant, hence gets classified under the approved category. This is an advantage to Bharat-22 ETF which isn’t IRDAI-compliant.
In addition, exempted pension funds can invest in the CPSE ETF under the 5-15 per cent equity allocation.
Launched in 2014, the CPSE ETF has seen four FFOs and investors who had entered in the first round have gained substantially. The government had initially given a discount of 5 per cent and rewarded bonus units to investors who had held on to the issue for more than one year. Investors in the subsequent four offers were also offered discounts of 5 per cent, 3.5 per cent, 4.5 per cent and 4 per cent, respectively.
In the fifth tranche, the RNAM-managed CPSE ETF received subscription of more than ₹30,000 crore against the issue size of ₹10,000 crore, including the greenshoe option. The CPSE ETF FFO4 was subscribed 3.05 times.