Mumbai : CPSE ETF, an open-ended Index Exchange Traded Scheme New Fund Offer will open on 18th March 2014 for anchor investors and on 19th March 2014 for non-anchor investors. Managed by Goldman Sachs Asset Management (India) Pvt. Ltd., CPSE ETF is an open ended scheme to be listed on the Exchanges in the form of an Exchange Traded Fund (“ETF”), which tracks the central public sector enterprises (“CPSE”) Index.
CPSE ETF is a unique opportunity for investors to invest in 10 Maharatnas, Navratnas and Miniratnas at a discount of 5% on the “Reference Market Price”1 of the underlying shares of CPSE Index, which will be offered to the CPSE ETF by the Government of India (“GOI”). 6.66% Loyalty Units (One Loyalty Unit will be allocated for every 15 Units held) for eligible Retail Individual Investors2 holding the units continuously from the Allotment Date to the Loyalty Unit Record Date, which will be one year from the NFO allotment date. The non-anchor investors NFO closes on 21st March 2014. Scheme reopens for continuous subscription and redemption on or before 11th April 2014.
Providing portfolio diversification through investment in blue-chip public sector enterprises, CPSE ETF is a play on India’s growth story through the largest companies in the core sector. The CPSE Index constituents are as follows: Oil & Natural Gas Corporation Ltd., GAIL (India) Ltd., Coal India Ltd., Rural Electrification Corporation Ltd., Oil India Ltd., Indian Oil Corporation Ltd., Power Finance Corporation Ltd., Container Corporation of India Ltd., Bharat Electronics Ltd. and Engineers India Ltd.
The CPSE Index is constructed in order to facilitate the Government of India’s initiative to disinvest some of its stake in selected CPSEs through the ETF route. As per data published by the index service provider, as of 13th March 2014, the CPSE index had a PE ratio of 10.52 and dividend yield of 3.51%.
Retail Individual Investors can invest a minimum of Rs. 5,000 and in multiples of Re. 1 thereafter up to Rs. 200,000. Non Institutional Investors/ QIBs can invest a minimum of Rs. 200,001 and in multiples of Re. 1 thereafter. Maximum Amount to be raised during the NFO will be Rs. 3,000 crore subject to maximum of 3% of the paid up share capital of each of the constituents of the CPSE Index. The entry and exit load is nil. CPSE ETF offers Tax Benefits as the Scheme is in compliance with the provisions of Rajiv Gandhi Equity Savings Scheme, 2013 (‘RGESS’).
Source : Sachin Murdeshwar