New Delhi: The Finance Ministry is mulling setting up of an exchange traded fund (ETF) for selling shares of state-owned companies as part of steps to meet the disinvestment target of Rs 30,000 crore in the current fiscal.

"The Disinvestment Department is considering setting up of an exchange traded fund in the format of Hong Kong Tracker Fund and has floated a concept note for implementing it," a top official in the Ministry said on Sunday.

The department is planning to create a pool of shares of the PSUs it wants to divest and create a fund (ETF), which would be listed on stock exchanges.

The ETF, which is an investment fund traded on stock exchanges much like stocks, would have an underlying benchmark which could be an index on the stock exchange.

The government has already identified a host of companies for disinvestment in the current fiscal. These include Hindustan Copper, Oil India, SAIL, BHEL, HAL and RINL.

The government is seriously pursuing this concept, after the offer for sale (OFS) and Institutional Placement Programme (IPP) model, to meet the Rs 30,000 crore target.

IPP and OFS are two new share sale tools introduced by the regulator Sebi in January this year, especially to help corporates increase their public shareholding.

These two models would also help companies achieve the minimum 25 percent public holding guideline by June, 2013.

All listed companies are required to have at least 25 percent public holding by June, 2013, while PSUs will have to meet it by August, 2013.

There are about 13 PSUs which have to meet the minimum public holding guidelines.

The government has initiated the process of divesting stake in PSUs in the current fiscal and is expected to come out with an initial public offer (IPO) of RINL by the end of this month.

The government had managed to raise only about Rs 14,000 crore through disinvestment last fiscal, against the Rs 40,000 crore target.

(Agencies)

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Tags:  Exchange traded fund, Finance Ministry, PSU stake sale, ETF
Finance Ministry mulls exchange traded fund for PSU stake sale

FinMin mulls ETF for PSU stake sale

New Delhi: The Finance Ministry is mulling setting up of an exchange traded fund (ETF) for selling shares of state-owned companies as part of steps to meet the disinvestment target of Rs 30,000 crore in the current fiscal.

"The Disinvestment Department is considering setting up of an exchange traded fund in the format of Hong Kong Tracker Fund and has floated a concept note for implementing it," a top official in the Ministry said on Sunday.

The department is planning to create a pool of shares of the PSUs it wants to divest and create a fund (ETF), which would be listed on stock exchanges.

The ETF, which is an investment fund traded on stock exchanges much like stocks, would have an underlying benchmark which could be an index on the stock exchange.

The government has already identified a host of companies for disinvestment in the current fiscal. These include Hindustan Copper, Oil India, SAIL, BHEL, HAL and RINL.

The government is seriously pursuing this concept, after the offer for sale (OFS) and Institutional Placement Programme (IPP) model, to meet the Rs 30,000 crore target.

IPP and OFS are two new share sale tools introduced by the regulator Sebi in January this year, especially to help corporates increase their public shareholding.

These two models would also help companies achieve the minimum 25 percent public holding guideline by June, 2013.

All listed companies are required to have at least 25 percent public holding by June, 2013, while PSUs will have to meet it by August, 2013.

There are about 13 PSUs which have to meet the minimum public holding guidelines.

The government has initiated the process of divesting stake in PSUs in the current fiscal and is expected to come out with an initial public offer (IPO) of RINL by the end of this month.
The government had managed to raise only about Rs 14,000 crore through disinvestment last fiscal, against the Rs 40,000 crore target.