Posted on Friday, March 10, 2017
After grand response to Reliance Mutual Fund "Central Public Sector Enterprise - Exchange Traded Fund (CPSE ETF)" FFO 1 in January 2017, Reliance Mutual Fund is once again tapping the market with CPSE FFO2 to mobilize Rs. 2500 crore. Issue is opening on 14.03.17 for Anchor investors and on 15.03.17 for other categories on investors and will close on 17.03.17. This is an Open Ended Index Scheme which is listed on the Exchanges in the form of an Exchange Traded Fund (ETF) tracking Nifty CPSE Index.
CPSE ETF was launched in March 2014 to facilitate Government of India's initiative of dis-investing its stake in selected Central Public Sector Enterprises through Exchange Traded Fund CPSE ETF route. The ETF is based on Nifty CPSE index which includes 10 listed Central Public Sector Enterprises. Nifty CPSE Index is constructed in order to facilitate Government of India initiative to disinvest some of its stake in selected CPSEs (Central Public Sector Enterprises) through the ETF route.
CPSE ETF is an Open Ended Index Scheme which is listed on the Exchanges in the form of an Exchange Traded Fund (ETF) tracking Nifty CPSE Index
Update: 17th March 2017
Reliance CPSE second ETF FFO gets over subscribed over 3.7 Times on last day
Second FFO received Rs. 9200 crore in subscription as against issue size of Rs 2500 crore.
Over 1.2 lakh retail applications received for subscription
Institutional portion oversubscribed 7.6 times - Rs. 5700 crore against Rs. 750 crore
Retail portion oversubscribed two times - Rs. 3500 crore against Rs. 1750 crore
"We, as Reliance, are delighted to have raised subscription interest of over Rs. 23,000 crore in the ETF in last two months leading to disinvestment of Rs 8500 crore. This clearly shows the future potential of fund raising through ETFs. We thank the government for this opportunity and will be happy to support them in their future disinvestment programs through ETFs" said Mr Sundeep Sikka, ED and CEO, Reliance Mutual Fund.
Update: 14th March 2017
Reliance MF CPSE ETF second FFO anchor issue oversubscribed by over 7.5 times on day 1.
Anchor investors put in bids of Rs 5,700 crore - over 7.5 times the amount of Rs 750 crore reserved for them, in the CPSE ETF second FFO issue - by the end of the first day.
The CPSE ETF, which opened for subscription by Anchor Investors today, got an overwhelming response from both domestic and overseas anchor investors.
Some of the leading names that participated in the bid on the first day, as anchor investors include: BNP Paribas, Morgan Stanley, SocGen, CitiGroup while the domestic investors include LIC, Exide Insurance, SBI Bank, Axis Bank and Canara Bank.
The RMF CPSE ETF FFO2 proposes to raise an aggregate of Rs 2,500 crore across all categories of investors.
The issue opens for all other investors from March 15-17, 2017 with allocation priority to retail and PFs.
Anchor investors have a reserved quota of up to 30% ie Rs 750 crore of total issue size of Rs 2,500 crore.
The bids received by the Anchor investors also surpass the aggregate issue size on day 1 by over 2 times.
Anchor investors had put in bids of Rs 6000 crore, as against Rs 1800 crore, in the CPSE ETF first FFO that concluded earlier last month.
"While the numbers are awaited, we are delighted to see this unprecedented response and strong appetite for the CPSE ETF, especially by anchor investors. Retail investors and PFs have also shown keen interest and we hope to see good participation from them within the next three days", said Sundeep Sikka, ED and CEO, Reliance MF
CPSE fact sheet shows the following:
Since Inception returns of CPSE ETF FFO1 units as on Feb 28, 2017, is 11.83% on absolute basis (FFO Units of CPSE were allotted on January 28, 2017). Said CPSE FFO gave the retail investors returns of 7.50% in a span of just 28 days. (January 31, 2017, till February 28, 2017). FFO 1 was for Rs. 6000 crore that got overwhelming response from investors across the board garnering above Rs. 1374.592 crore. Reliance MF had to refund Rs. 7742.59 crore. .This time the issue size is Rs. 2500 cr. It is offering 3.50% upfront discount to all categories of Investors.
The Nifty CPSE Index is trading at a P/E of 11.72 xs as against 23.13x of Nifty 50 index. In the dividend yield too CPSE index (3.74%) outperforms Nifty 50 (1.25%). A significant benefit which also comes with this fund is the lower expense ratio of 0.065% which is way lower than other active funds. The active fund manager has to outperform the indices by at least 200 basis points to give any additional return to the investors. This ensures that the gains accrue to investors only.
CPSE FFO comprises of ONGC, Coal India, IOC, GAIL, REC, Power Finance, Container Corp, Bharat Electronics, Oil India and Engineers India and these PSUs have wtg. of 24.6%, 19.6%, 18.4%, 11.7%,5.8%, 5.5%, 5.0%, 4.1%, 2.9% and 2.0% respectively.(portfolio as on 28.02.17)
Investors who want to play on India growth story through investment in the large CPSE stocks at attractive valuations can look at investing in this CPSE ETF as it gives one a chance to diversify portfolio through investment in blue-chip Maharatna and Navaratna. This investment is considered as a safe investment opportunity.
Conclusion: Investors looking for safe returns in medium to long term may consider investment.
Dilip Davda (SEBI registered Research Analyst-Mumbai), a freelance journalist for more than 25 years, is a stock market analyst and news article writer. Since 1985, he has contributed to print media, electronic media and often appears on TV channels as visiting stock analyst. His articles are regularly publishes in Corporate India, Smart Investment (English and Gujarati weekly published from Ahmedabad), Free Press Journal and many other news papers & magazines. He is also a visiting stock analyst on DD News TV Channel.
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. As SME issues have entry barriers and low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.
(SEBI registered Research Analyst-Mumbai).
Rs 899 Unlimited Equity
Rs 499 Unlimited Curr
or Rs 15 per Trade
Lowest Transaction Charge
Lowest Call & Trade Fee
Lowest Stamp Duty
Flat Rs 20 Per Trade
Free Equity Delivery Trades
Rs 100 off on account opening* + 100% brokerage refund if in 60 days you have made net profits
(* on online account opening)