50 rupee and 2,000 rupee banknotes. (Photographer: Brent Lewin/Bloomberg)

India To Retain Rs 17,000 Crore From CPSE ETF Subscription

The government is likely to retain Rs 17,000 crore from the ongoing CPSE ETF follow on offer, as against the original offer size of Rs 14,000 crore, an official said Wednesday.

The government had on Tuesday launched the fourth tranche of the Central Public Sector Enterprises Exchange Traded Fund with a base issue size of Rs 8,000 crore. The issue had a green-shoe option to retain additional subscription of Rs 6,000 crore, taking the total issue size to Rs 14,000 crore.

The fourth tranche of the CPSE ETF saw bids worth over Rs 3,000 crore from investors on Wednesday, with 95 percent subscription by retirement funds and insurance companies. On the first day, anchor investors had put in bids for 5.5 times the shares reserved for them, amounting to Rs 13,300 crore.

The official said there was scope for retaining more over-subscription, but that could have meant government stake in some CPSEs falling to 53 percent. An approval of alternative mechanism, headed by Finance Minister Arun Jaitley, would be required to increase the amount to be raised from FFO of CPSE ETF.

The CPSE ETF comprises shares of the 11 state-run companies including Oil and Natural Gas Corporation, Coal India, Indian Oil Company, Oil India, Power Finance Corporation, Rural Electrification Corporation and Bharat Electronics. NTPC, SJVN, NLC and NBCC are the new entrants in the ETF basket.

CPSE ETF was set up in 2014 and the government has so far sold stake in 10 companies in the basket in three tranches,raising Rs 11,500 crore.

The government has mopped up over Rs 15,000 crore so far this fiscal through disinvestment in state-run units, which includes about Rs 5,300 crore from Coal India share sale and Rs 1,700 crore from the public listing of of four public-sector undertakings—RITES, IRCON, MIDHANI and Garden Reach Shipbuilders.

The budgeted target from PSU disinvestment is Rs 80,000 crore for the current fiscal.