The government is moving faster to sell its stake in Axis Bank, L&T and ITC to mobilise revenues. It is initiating steps to set up a new ETF in order to sell stake. The proposed ETF will also have other public sector company stocks.
Finance ministry will soon invite bids from merchant bankers to advise the government on new ETF. The point here is not to go in for an all out stake sale in these companies, but instead do it in small tranches, hence the proposal for an ETF model.
The government shed its stake in Axis Bank to around 10 percent in FY14 and the plan was not to sell any further stock in FY15. Having said that just for one stock the idea has been for some time to come out with a new exchange traded fund. ETF model is the one that they want to follow where in very small tranches of each of these stocks will be actually available for investors.
There could also be some more PSU stocks in this basket. So, moving ahead, on that the government is also now very soon going to invite bids from merchant bankers who would be advising the government on what should be the size of the ETF, what other PSU stocks can be brought in.
SUUTI still holds around 11.66 percent stake in Axis Bank, 11.77 percent in ITC and 8.18 percent in L&T. These are all big heavily-traded stocks in the market, hence the thinking to go in for an ETF model.
So, in the next couple of months, we will be hearing more on this front once the merchant bankers have finished giving their advice and some kind of clarity is available.
The government might also seek nod from the cabinet and start discussion with Sebi in terms of further procedures on this.
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