CPSE ETF: Sixth tranche opens today, govt aims to raise up to Rs 10,000 crore

The government plans to raise up to Rs 10,000 crore from the sixth tranche of CPSE ETF which opened today for retail investors. The issue is part of the Modi government's disinvestment programme to raise a record Rs 1.05 lakh crore in 2019-20, Rs 20,000 crore more it collected in fiscal 2018-19.

The CPSE ETF was launched by the United Progressive Alliance (UPA) government on March 28, 2014 to sell its stake in the Central Public Sector Enterprises (CPSEs).

An upfront discount of 3% will be given to all categories of investors. It has an expense ratio of 0.0095%.

The CPSE Exchange Traded Fund (ETF) tracks shares of 11 Central Public Sector Enterprises (CPSEs) -- ONGC, NTPC, Coal India, IOC, Rural Electrification Corp, Power Finance Corp, Bharat Electronics, Oil India, NBCC India, NLC India and SJVN.

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Retail individual investors are allowed to invest minimum Rs 5,000 and in multiples of Rs. 1 thereafter in the issue. Non-institutional investors can invest minimum Rs 200,001 and in multiples of Rs 1 thereafter.

For anchor investors, minimum application amount is Rs 10 crore and in multiples of Rs. 1 thereafter.

The units will be listed on NSE and BSE on or before August 2 2019.

The CPSE ETF measures its performance against the benchmark Nifty CPSE Index.

Till June 28, 2019, investors in CPSE ETF clocked compounded annual growth returns (CAGR) of 9.81% since inception.

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For three-year period preceding June 28, 2019, CAGR stood at 10.80%. Similarly, investors logged CAGR of 10.67% in one year.

The follow-on fund offer (FFO) 5 will have a base issue size of Rs 8,000 crore with an option to retain over subscription of another Rs 2,000 crore.

Through the earlier five tranches of the CPSE ETF, the government has already raised Rs 38,500 crore -- Rs 3,000 crore from the first tranche in March 2014, Rs 6,000 crore in January 2017, Rs 2,500 crore from the third in March 2017, Rs 17,000 crore in November 2018 and Rs 10,000 crore in March 2019.

Edited by Aseem Thapliyal