ETF with L&T, ITC, Axis stocks planned

NEW DELHI: The government is unlikely to offload Axis Bank shares in the market as it had earlier planned but is instead looking to bunch a part of its holding in the lender, along with some of the shares it holds in L&T and ITC, to float a new exchange-traded fund (ETF).
In addition, senior government officials said, some of the blue chip government stocks may be clubbed together for the second ETF from the government stable and to mop up Rs 10,000 crore to Rs 12,000 crore.
An ETF is a basket of stocks that is traded on exchanges and the first one launched during the last fiscal was seen to have a heavy presence of energy PSUs. On July 18, TOI was the first to report that based on inputs from a ratings agency, the government was looking at setting up a second ETF, which is likely to be less energy heavy.
The government owns shares in ITC (11.3%), L&T (8.2%) and Axis Bank (11.6%) through the Specified Undertaking of UTI after it repaid the liabilities of the erstwhile Unit Trust of India and retained the remaining assets, which included blue chip stocks. ITC and L&T have been lobbying with the government against off-loading of shares in the market, citing their strategic role, an argument that has come in for criticism.
The government is chasing record disinvestment receipts of over Rs 63,000 crore, which includes sale of shares in top-notch PSUs such as Coal India, ONGC and SAIL. Another Rs 15,000 crore was expected to come from the sale of Axis Bank shares, while the remaining Rs 5,000 is budgeted from residual equity in Balco and Hindustan Zinc, two companies in which the NDA government had sold majority control to Anil Agarwal’s Sterlite Industries.

Despite the four companies cleared for disinvestment expected to help the government meet its Rs 43,000 crore target for the year, officials said the finance ministry will push for stake sale in at least six or seven companies that it had listed for the year, including the likes of Power Finance Corporation and Rural Electrification Corporation.
“We will chase as much as we can since we want to make use of the positive sentiment in the stock market. Besides, lower government equity will also result in professionalization of the management as more independent directors will come in,” said an official. If the government manages to push ahead with its disinvestment strategy it is on course to garner record receipts from stake in PSUs.