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About CPSE ETF Background

Government of India (“GOI”), as part of its disinvestment programme, approved the setting up of Central Public Sector Enterprise Exchange Traded Fund (“ETF”) comprising equity shares of Central Public Sector Enterprises (“CPSE”), which was launched as a CPSE ETF mutual fund scheme.The Scheme was launched in March 2014, was offered to the public for Subscription by way of a New Fund Offer (NFO). The Units were listed (and continue to be listed) on the Stock Exchanges on April 4, 2014 in form of an ETF tracking the Nifty CPSE Index.

Investment Objective

The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the total returns of the Securities as represented by the Nifty CPSE Index, by investing in the Securities which are constituents of the Nifty CPSE Index in the same proportionas in the Index. However the performance of the Scheme may differ from that of underlying index due to tracking error. There can be no assurance or guarantee that the investment objective of the Scheme would be achieved.

What is the FFO 4 issue size and dates?

The initial issue size is Rs.3,500 crore plus an additional amount (if any) to be decided by GOI post closure of Non-Anchor Investor FFO period.

The FFO 4 period is as below:

Anchor Non- Anchor Investor
FFO4 Opening Date 19th March, 2019 20th March, 2019
FFO4 Closing Date 19th March, 2019 22th March, 2019

Benchmark Index?

Nifty CPSE Index

About the Index

Nifty CPSE Index is constructed in order to facilitate Government of India’s initiative to dis-invest some of its stake in selected CPSEs. The Government opted for ETF route for disinvestment. The ETF shall track the performance of the Nifty CPSE Index. The index values are to be calculated on free float market capitalization methodology. The index has base date of 01-Jan- 2009 and base value of 1000. Weights of index constituent shall be re-aligned (i.e. capped at 20%) on a quarterly basis after the expiry of the F&O contracts in March, June, September and December.

Selection Criteria’s for the Nifty CPSE Index:

The CPSEs selected meet below mentioned parameters:

1. Included in the list of CPSEs published by the Department of Public Enterprise

2. Listed at National Stock Exchange of India Ltd. (NSE)

3. Having more than 52% government holding (stake via Govt. of India or President of India) under promoter category.

4. Companies having average free float market capitalization of more than 1,000 Cr. for six month period ending August 2018 are selected.

5. Companies which are IRDA dividend norms compliant shall be considered eligible to be included in the index.

Index Composition as on February 28, 2019 is as below:

COMPANY NAME WEIGHTAGE (%)
Oil & Natural Gas Corporation Ltd. 20.43%
NTPC Ltd. 19.54%
Coal India Ltd. 19.09%
Indian Oil Corporation Ltd. 18.64%
Rural Electrification Corporation Ltd. 6.72%
Power Finance Corporation Ltd. 6.13%
Bharat Electronics Ltd. 4.06%
Oil India Ltd. 2.84%
NBCC (India) Ltd. 1.46%
NLC India Ltd. 0.63%
SJVN Ltd. 0.47%

What is the minimum amount of investment?

1. For Anchor Investor – Qualified Institutional Buyer, applying under the Anchor Investor Portion, with a minimum application amount of Rs.10 Crores (Rupees Ten Crores). At least 25% of the application amount to be given during Anchor Investor FFO 4 period and remaining portion before the end of Non-Anchor investor FFO 4 period. The Anchor Investor will not be able to withdraw / modify its application once submitted to the AMC.

2. Retail Individual Investors (including HUFs applying through their Karta’s and NRIs) can invest in the FFO 4 of the Scheme with a minimum investment amount of Rs.5,000 (Rupees five thousand), and in multiples of Re.1 (Rupee One) thereafter up to Rs.200,000 (Rupees Two Lakhs). Any Applicant (Individual, NRI or HUF) applying above Rs. 200,000 (Rupees Two Lakhs) will be considered under Non Institutional Investors category.

3. Non-Institutional Investors (NII)/ Qualified Institutional Buyers (QIB) (other than Anchor Investors) can invest in the FFO 4 with a minimum investment amount of Rs. 2,00,001 (Rupees Two Lakhs and One) and in multiples of Re. 1/- (Rupee One) thereafter.

Is there any discount to investors?

GOI is offering discount of 4% on the underlying shares of Nifty CPSE Index. The same will be applicable to all categories of investors. The Discount offered by GOI may not be a discount to the closing market price of the underlying shares of Nifty CPSE Index on the FFO 4 Allotment Date.

Can I submit multiple applications?

1. An Investor ideally should submit one application. If multiple applications are submitted by an investor/ investor(s) (with different holding pattern) the applications will be clubbed on first/ sole holder PAN for determining investor category (i.e. Retail Individual, NII). E.g. an Individual Investor A, submits two applications of Rs.1,50,000 each with two different demat accounts with holding pattern as A, B and A, C, B. The total investment under Investor A’s PAN will be considered as Rs. 3,00,000, thus he will be categorized as NII and will not receive the allotment under Retail Individual Investor category. In case of oversubscription in the Retail Individual Investor & Qualified Institutional Buyers (Retirement Funds) category, Investor A will not be eligible for any allotment.

2. However, QIB may submit multiple applications, as Anchor Investor during Anchor FFO 4 period and another under QIB/ NII during Non-Anchor FFO 4 period. Such applications will not be clubbed at PAN level for allotment purpose.

Anchor Investor Portion

The portion not exceeding 30% (Thirty percent) of the Maximum Amount to be Raised (if any) as stated in Section III – Further Fund Offer 4 of the Supplement, shall be available for allocation to Anchor Investors on a proportionate basis. Please note that in case of under-Subscription in this category, the under subscribed portion will be available for spill-over from the Retail individual Investor and Qualified Institutional Buyers (Retirement Funds) Portion at the discretion of the AMC. If even after the spill-over from the Retail Individual Investor and Qualified Institutional Buyers (Retirement Funds) Portion, the Anchor Investor Portion remains under subscribed, then the balance shall be met by spillover from the Qualified Institutional Buyers (other than Retirement Funds) and Non Institutional Investor Portion.

Will the allotment be on First Come First serve basis?

Allotment will be made on a proportionate basis and not on a first come first serve basis.

Is there any lock in period for this investment?

For Anchor Investors there will a lock-in for 30 days from the FFO 4 allotment date. For all other investors there is no lock in period.

To apply the issue Demat Mode (Online), please Call on 022-28584444