Govt to float 2nd ETF to offload CPSE stake, invites AMCs to submit bids

New Delhi: Government is planning to create a new Exchange Traded Fund comprising stocks of listed CPSEs and stakes in other corporate entities to monetise its holdings.

The Finance Ministry has invited applications to engage an asset management company (AMC) to create the new ETF.

The finance ministry invites “request for proposals (RFPs) to engage an asset management company for creation and launch of a new Exchange Traded Fund (ETF) comprising shares of listed CPSEs and other corporate entities”, an advertisement said.

The government is planning to create a new ETF, in addition to the existing CPSE ETF that was launched in March 2014.

“The proposed new ETF will serve as an additional mechanism for the government to monetise its shareholdings in those CPSEs that eventually form part of the ETF basket,” it said.

The proposed ETF could be a new fund offer (NFO) followed by further fund offer (FFO)/tap mechanism/tranche or in other additional offering.

“Government may provide appropriate discount for different investors in the form of a suitable mix of upfront and back-end loyalty discount,” the advertisement said.

The Department of Investment and Public Asset Management (DIPAM) under the Finance Ministry will select and appoint one AMC with experience and expertise in launch and management of equity mutual fund or ETF schemes.

The applicants, required to submit their bids by 24 August, can either be a single entity or a consortium.

Sebi-registered mutual funds or asset management companies with at least 5 years of experience of fund management, domestically or globally, either on their own or through sister concerns or consortium partners would be eligible to place their bids.

Also, the eligible applications should have more than Rs 2,500 crore as average equity or ETF assets under management as of April-June 2016 quarter, the ministry said.

The government is in the process of selling its stake in central public sector enterprises (CPSEs) through strategic divestment.

It has engaged NITI Aayog to lay out a strategy in consultation with the ministries concerned.

Earlier in July, NITI Aayog Vice-Chairman Arvind Panagariya had said the government may go ahead with strategic divestment in public sector units in the next six months.