Government To Raise About Rs 11,000 Crore Through CPSE ETF

The Narendra Modi government plans to raise between Rs 10,000 crore and Rs 11,000 crore from the sixth tranche of the Central Public Sector Enterprises' Exchange Traded Fund that will open on July 18, according to a senior government official.

The CPSE ETF Further Fund Offer-5 will have a base offer of Rs 8,000 crore, and a greenshoe option—or the option to retain oversubscription—will be exercised based on the response received, the official told BloombergQuint on condition of anonymity. As the current market conditions are better, the government would be able to raise an additional Rs 2,000-3,000 crore through this option, the official said.

The CPSE ETF has shares of 11 state-run companies. They are:

Rural Electrification Corporation Ltd. was removed from the ETF after the government sold its stake in the company to Power Finance Corporation Ltd. The changes came into effect on July 15.

A discount of around 3 percent may be offered to investors subscribing to the CPSE ETF, the official said. The discount, however, can be lower as shares of Indian Oil Corporation Ltd. will have to bought from the market as the government intends to retain its 51 percent stake in the company without diluting its weight in the ETF.

Indian Oil has 16.96 percent weight in the CPSE ETF. The government owns 52.18 percent of the oil retailer.

The government has so far raised Rs 37,850 crore from the CPSE ETF since it was launched in 2014.