CPSE ETF 4th tranche: Anchor investors put in Rs 13,300-cr bids, subscribe 5.5 times

The fourth tranche of CPSE ETF follow-on offer was lapped up by institutional investors, with the portion reserved for anchor getting subscribed 5.5 times to the tune of Rs 13,300 crore.

The government has launched the follow-on fund offer (FFO) of CPSE Exchange Traded Fund (ETF), comprising shares of 11 state-run companies, to raise up to Rs 14,000 crore from the market. Of this, the base issue size is Rs 8,000 crore and another Rs 6,000 crore is a green-shoe option.

As much as 30 percent of total base issue size, or Rs 2,400 crore, was reserved for anchor investors, who put in bids worth about Rs 13,300 crore, according to Reliance Nippon Life Asset Management, which is the manager of the fourth tranche of the CPSE ETF.

The issue opened for anchor investors on November 28 and received subscriptions from investors including mutual funds houses, foreign portfolio investors (FPI), insurance and retirement funds.

Of the total, 65 percent demand came from FPIs.

The FFO will open for subscription for retail and other institutional investors on November 28 and will remain open till November 30. The government has already raised Rs 11,500 crore in the earlier three tranches of the CPSE ETF, which functions like a mutual fund scheme.

The Finance Ministry has reconstituted the CPSE ETF by removing three companies -- GAIL, Container Corporation and Engineers India from the basket as the government holding in these companies has fallen below 55 percent.

These companies have been replaced by four other state-run entities — NTPC, SJVN, NLC and NBCC. With this, the number of companies in the CPSE ETF basket has increased to 11, as against 10 earlier. The other seven bluechip PSUs in the CPSE ETF are ONGC, Coal India, IOC, Oil India, PFC, REC and Bharat Electronics.

CPSE ETF was set up in 2014 and the government has so far sold stake in the 10 companies in the basket in three tranches, thereby raising Rs 11,500 crore -- Rs 3,000 crore from the first tranche in March 2014, Rs 6,000 crore in January 2017 and Rs 2,500 crore from the third in March 2017.

The government has mopped up over Rs 15,000 crore so far this fiscal through PSU disinvestment, which includes about Rs 5,300 crore from Coal India share sale, Rs 1,700 crore from IPOs of four PSUs -- RITES, IRCON, MIDHANI and Garden Reach Shipbuilders.