The fund manager will assist the government in sale of residual stakes in ITC, L&T and Axis Bank.
The Government of India holds these shares - 11.27 per cent in ITC, 8.18 per cent in L&T and 11.66 per cent in Axis Bank - through Specified Undertaking of UTI (SUUTI).
As many as seven asset management companies (AMCs) -- Reliance Mutual Fund, Birla Sun Life MF, Kotak Mutual Fund, SBI Mutual Fund, UTI Mutual Fund and Sundaram Mutual fund in consortium with Edelweiss Mutual Fund had participated in this bidding process.
The selected fund house, which would be finalised after deliberations by SUUTI's board and other officials, will act as the manager for the new ETF, which is expected to hit the market in the last quarter of the current financial year (2014-15).
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ICICI Securities is advising the government for selection of a fund house for managing an ETF for monetising these SUUTI shares.
The government had sold 9 per cent stake in Axis Bank held through SUUTI in March this year through the bulk deal on the stock exchanges. Formed in 2003, SUUTI is an offshoot of the erstwhile UTI (Unit Trust of India).
As per the bid documents, the ETF could be launched as a New Fund Offer (NFO) followed by further tranches and/or a tap structure, and SUUTI and government may provide appropriate discount for different investors, in the form of a suitable mix of upfront and back-end loyalty discount.
The proposed ETF will be launched as a close-ended structure.
In March, the government had successfully launched the ETF comprising shares of 10 PSUs. The ETF has registered handsome gains since its launch.