Commenting on the Department of Investment and Public Asset Management's (DIPAM) plans to divest through a Further Fund Offer (FFO) of Central Public Sector Enterprises Exchange Traded Fund (CPSE ETF) on January 17, Neeraj Kumar Gupta, Secretary, DIPAM, has said he is hopeful of a positive response from all kinds of investors.
"The response is likely to be very positive because in the developed markets, the ETF is a very popular product. As much as 40 percent of the daily traded market is in ETF and it gives the advantage of equity as well as mutual funds. Like equity, you can trade it daily and it gives you the stability and risk management like mutual funds. And there are good yields and upside. So, I am very hopeful that it will attract the imagination of investors," Gupta told ANI.
DIPAM intends to raise Rs. 6,000 crore from the CPSE ETF fund offer with a basic issue size of Rs. 4,500 crore with a green shoe option of Rs. 1,500 crore. As part of the FFO, an upfront discount of five percent will be offered to all category of investors.
"We are giving an upfront discount of five percent. But besides that, the allotment will be on the basis of priority for the retail investors. Retail investors are more interested in firm allotment and that has been envisaged in this scheme of things. Thus, retail investors will get the priority over other applicants," Gupta said.
"CPC ETF was opened first time in 2013 and New Fund Offer of Rs. 3,000 crore was raised in 2014. Now, we are coming with FFO of Rs. 6,000 crore for the ETF. This ETF is a tested product in the market and hence is very popular. This ETF is giving a return of 14.4 percent in terms of CGAR. When you compare it with NIFTY, ETF is much higher. NIFTY gives a return of 8.9 percent. If we talk about dividend, it has given about 14.07 percent and for the corresponding period, NIFTY gave a dividend of 1.3 percent. This is a very attractive investment option for investors, who want to have stability and better risk management than equity," he added.
At the time of the NFO, investors were given a five percent discount in price. There was also a loyalty bonus built into the fund.
The FFO will be open for all category of investors including anchor investors, retail investors, retirement funds, non-institutional investors and foreign portfolio investors. The offer remains open until January 20.
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