Govt eyes to meet disinvestment target via PSU ETF

In a bid to meet its disinvestment target; the government is pulling out all the stops including the introduction of a Exchange Traded Fund for PSUs, report Sajeet Manghat and Sandeep Srikanth of CNBC-TV18.

The finance ministry is forging ahead to introduce an exchange traded fund for PSU's. Designed on the lines of the Hong Kong Tracker, in consultation with ICICI Securities, the PSU ETF will allow the government to monetise its shareholdings in the public sector companies.
The department of divestment has invited proposals from asset management companies which are registered with Sebi and have at least five years experience in fund management among other eligibility criteria. The AMC should also have an average equity or ETF AUM of not less than Rs 2500 crore.
Based on the above criteria about 15-20 AMCs will be eligible. Government plans to launch the ETF as a new fund offer. The pricing of the units has been left flexible with government having the option to provide appropriate discount to different investors. Investors can also avail of upfront & back end loyalty discounts. A pre-bid meeting with interested parties is scheduled for January 11 and the deadline for proposals from AMC's is 24th January.