With an aim to monetize government's stake in listed PSUs, the Finance Ministry is planning to launch a new Exchange Traded Fund (ETF) as an additional mechanism to the existing Central Public Sector Enterprises (CPSE) ETF, comprising stocks of listed CPSEs and government’s stake in other corporate entities.
The Department of Investment and Public Asset Management (DIPAM) has invited bids for the second ETF from 'Advisors' by July 11to help create and launch the proposed fund. Under the new ETF government will appoint one advisor for the new CPSE ETF, which will be involved in a three stage process wherein stage-I shall be to help create a new ETF, stage-II shall include helping select an Asset Management Companies (AMC), a Legal Adviser and help launch and manage NFO. Stage III shall comprise FFO (follow on offer)/Tap and any other subsequent offerings and obligations arising out of NFO (New Fund Offer)/FFO/Tap.
DIPAM has also stated that the entity appointed as Advisor, will not be eligible to participate for selection as the AMC or ETF provider, so as to avoid any situation of conflict of interest. The ETF may include government stake in companies held through SUUTI as well as those in which it still has some holding. Among the listed entities, SUUTI holds 11.72 per cent in Axis Bank, 11.27 per cent in ITC and 8.18 per cent in L&T.