| MUMBAI/NEW DELHI
MUMBAI/NEW DELHI Feb 20 The Indian government
is seeking to raise around $500 million by selling partial
stakes in 10 state-owned companies via an exchange traded fund
that will be operated by Goldman Sachs' asset management
The Central Public Sector Enterprises ETF will start
accepting subscriptions starting on Tuesday with an aim to raise
as much as 30 billion rupees ($490.46 million) by March 21.
The ETF will target mainly retail investors, although the
fund will also be sold to institutional and foreign investors.
The ETF is an important part of the government's target to
sell stakes in state-owned companies worth 160.3 billion Indian
rupees ($2.62 billion) by the year ending March so India can
meet its revised fiscal deficit target of 4.6 percent of gross
"This ETF will give the government a new vehicle to sell
stakes (in state-owned companies)," said Alok Tandon, joint
secretary in the Department of Disinvestment at a news
conference on Friday.
"We're hopeful of good retail investor response."
A senior official in the finance ministry dealing with stake
sales said the government has already raised 74.78 billion
rupees as part of its disinvestment drive this year.
Tandon also said on Friday that India was aiming to raise an
additional 30-40 billion rupees via the sale of a stake held by
a state-run trust fund in Axis Bank Ltd.
Analysts have said that the ETF could better help the
government divest its stakes in some of the public sector
companies by pairing blue chips such as Oil and Natural Gas Corp
Ltd (ONGC) with relatively smaller and financially
Finance Minister P. Chidambaram had first announced plans to
introduce the ETF last year, but volatile markets have delayed
the launch and also forced it to lower its disinvestment target
from the previous 400 billion rupees.
The launch comes as the broader NSE index has
rallied this month to record highs. But the individual
performances of companies in the ETF have varied, including a
gain of around 12 percent so far this year for ONGC, but a fall
of around 9 percent in Coal India Ltd.
ETFs for retail investors have traditionally struggled in
India despite their low management fees.
Equity ETFs had just about $225 million in assets under
management as of the end of February, or less than 1 percent of
the $150 billion held by domestic funds, according to data from
Association of Mutual Funds in India.
($1 = 61.1675 Indian Rupees)
(Additional reporting by Archana Narayanan in MUMBAI; Editing
by Rafael Nam & Kim Coghill)