'CPSE ETF is a good platform for investors to park their funds in this volatile market'
In conversation with Manish Singh, Joint Secretary, DIPAM, Ministry of Finance where he details the upcoming disinvestment of CPSE and the future of ETF market in India.
Q: What are the features which will attract retail investors to the issue? And what amount of fund you are looking forward to raise including the green shoe option?
A: The CPSE ETF FFO consists of base offer of Rs 4500 crore and Rs 1500 crore green shoe option. The government is looking to mobilise Rs 6000 crore of disinvestment receipts through this ETF.
We are offering 5% discount for all categories of investors, but retail investors will be given preference in allotment in the non-anchor portion. This is a good opportunity for the retail investors to invest in the Maharatna and Navratna companies of the Government of India.
This is a good platform for investors to park their funds in this volatile market.
Q. Do you think the retail and small investors will participate in the FFO as the concept of ETF is still not clear to them?
You are right, the ETF market in India is at a nascent stage, but we started in the year 2014 and we are taking this initiative ahead. To make this popular, we through our Asset Managers and through NSE we are increasing the awareness among the investors. We are doing investor meet in different cities in India where people invests in the equity markets and we are making them aware for the advantages of investing in ETF.
Q. Is there any other initiative other than the discount to retail investors like the loyalty units given to retail investors in the first tranche?
This time the Government decided to give upfront discount and preference in terms of allocation to retail investors which is being built in the offer for retail investors.
Q.Is there any reshuffling made to the basket of companies in the ETF?
The basket will remain the same and the composition will not change. We rebalance the weightage of the companies on a quarterly basis once it reaches 25%.