Overseas ETF drill

The government is exploring the option of launching ETFs in the overseas markets in the current fiscal

By R. Suryamurthy in New Delhi
  • Published 25.04.19, 12:56 AM
  • Updated 25.04.19, 12:56 AM
  • a min read
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It would be a new ETF of state-owned firms as investors are more interested in such funds, an official said Picture by Shutterstock

Buoyed by the success of exchange traded funds in meeting the divesment target, the government is exploring the option of launching such funds in the overseas markets in the current fiscal.

“The plan is still in the preliminary stages and we would go ahead with it based on the response we get from the investor community and market conditions,” officials in the department of investment and public asset management said. Roadshows are being planned to gauge the response to such a fund abroad.

The official said it would be a new ETF of state-owned firms as investors are more interested in such funds. Based on the response of the investors, an expression of interest for fund managers and advisers will be invited. The fund is likely to be launched in the third quarter if things go according to plan, the officials said.

In the interim budget, the finance minister had set a divestment target of Rs 90,000 crore for 2019-20, which is 12.5 per cent higher than 2018-19. Last fiscal, the government mopped up about Rs 5,000 crore more than the targeted Rs 80,000 crore. Of this, receipts from initial public offerings (IPO) were a paltry Rs 1,900 crore.

Over Rs 45,000 crore came from ETFs — index funds that are listed and traded on domestic bourses just like stocks — which were introduced in 2017-18.

The government has two ETFs — CPSE and Bharat-22 ETF — listed on local bourses. The Bharat 22 ETF has 16 central PSUs covering six sectors, three state-run banks and three private sector firms where the government has a minority stake. The CPSE-ETF tracks the Nifty CPSE Index and has shares of 11 companies.

RBI stake sale in NHB, Nabard

The RBI has divested its entire stake in National Housing Bank and the National Bank for Agriculture and Rural Development (Nabard) for Rs 1,450 crore and Rs 20 crore, respectively. The RBI sold stake in NHB on March 19 and in Nabard on February 26.