Reliance CPSE ETF FFO:01Jan to 20 Jan2017
This has reference to the forthcoming FFO (Further Fund Offer) of CPSE ETF, an Open-ended Index Exchange Traded Scheme.
CPSE ETF FFO dates:
| For Anchor Investors | For Non Anchor Investors | |
| FFO Opens on | January 17, 2017 | January 18, 2017 |
| FFO Closes on | January 17, 2017 | January 20, 2017 |
CPSE ETF was launched in order to facilitate GOI’s (Government of India) initiative to dis-invest some of its stake in selected CPSEs through the innovative ETF route. The ETF is based on Nifty CPSE index which includes 10 listed Central Public Sector Enterprises. CPSE ETF is a Rajiv Gandhi Equity Savings Scheme (RGESS) Qualified Scheme.
CPSE ETF: Background
- CPSE ETF New Fund Offer (NFO) was first launched in March 2014.
- NFO received overwhelming response. NFO collection was Rs.4,363 crs, out of which Rs.1,363 crs was refund to investors due to the issue size limit of Rs.3,000 crs
- Participation across various categories of investors – 37,323. Investors invested in CPSE , out of which ~98.5% were Retail Individual Investors
- Units of CPSE were listed on 04th April 2014 on NSE & BSE
Recent Development: Proposal to launch the FFO
- Based on the success of CPSE ETF NFO, DIPAM is conducting further divestment of the underlying CPSEs which are constituents of the CPSE ETF and hence launching the second tranche of CPSE ETF.
- For Anchor Investor FFO opens on Jan 17, 2017 and closes on Jan 17, 2017 and for Non – Anchor Investor FFO opens on Jan 18, 2017 and closes on Jan 20, 2017
- Maximum Amount to be Raised during FFO is Rs. 6,000 Crores [(“Initial Amount” – Rs. 4,500 Crores plus “Additional Amount” – Rs. 1,500 Crores which is in addition to the stated “Initial Amount”)
- Discount of 5 (five) % on the “FFO Reference Market Price” of the underlying shares of Nifty CPSE Index shall be offered to FFO by GOI to all categories of investors
Investment Rationale:
- Play on India growth story through investment in the large CPSE stocks at attractive valuations
- Portfolio diversification through investment in blue-chip Maharatna and Navaratna CPSE stocks which are sector leaders
- FFO price advantage – Upfront discount to all categories of investors
- It has attractive Valuation and Dividend Yields: P/E ratio and dividend yields better compared to broader market index
- It will provide the flexibility of trading on real time basis
- Lower expense ratios and transaction costs
- You will be able to diversify exposure across a number of Public Sector companies through a single instrument
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