Published on Sunday, March 17, 2019 by Chittorgarh.com Team
|Issue Open||March 20, 2019|
|Issue Close||March 22, 2019|
|Methodology||Periodic Capped Free Float|
|No. of Constituents||11 Companies|
|Launch Date||March 18, 2014|
|Base Date||January 01, 2009|
|Calculation Frequency||Online Daily|
|Index Rebalancing||Quarterly Weight Rebalancing|
|Type of Scheme||Open Ended Index Exchange Traded Scheme|
|Fund size||Rs 8,198.09 Cr (Monthly Average)|
|Dividend Yield||5.52% (as of March 2019)|
|Exchange Listed||NSE, BSE|
CPSE ETF is an open ended index exchange traded scheme designed disinvest of goverment of India's stack in 11 PSU Companies. CPSE ETF is managed by Reliance Nippon Life Asset Management Ltd through Reliance Mutual Fund business unit. Company has so far brought 4 tranches of CPSE ETF with maiden fund offer (NFO) in March 2014 and thereafter 3 successive Following Fund Offers (FFOs) in January 2017, March 2017 and Nov 2018 is now coming out with CPSE ETF FFO4.
FFO4 is an offer of units of Rs. 10 each (i.e. face value) for cash (on allotment, the value of each Unit would be approximately 1/100th of the value of Nifty CPSE Index) to be issued at a premium, if any, approximately equal to the difference between face value and FFO 4 Allotment Price during the Further Fund Offer 4 ('FFO 4') and at NAV based prices thereafter. For the existing CPSE ETF the Ongoing Offer Period for the Scheme commenced on April 04, 2014. CPSE ETF is an open ended index scheme listed on the Exchange in the form of an Exchange Traded Fund (ETF), which tracks the Nifty CPSE Index.
Discount is 4% is offered on the FFO4 reference market price to underlying NIFTY CPSE Index shares.
The CPSE ETFs, through which the GoI (Government of India) intends to raise around Rs 3,500 crore, via its CPSE FFO4 (5th Tranche) is opening for investors in this week. Issue tenure details are as under:
For Anchor Investors – Opens on 19.03.19 and will close by the same eve.
For Others –Issue opens on 20.03.19 and will close on 22.03.19.
Allotment of CPSE ETFs will be made on the basis of reference market price of the underlying ETF shares discovered during the issue process. This issue offers upfront discount of 4% across all the categories of investors.
Minimum application amount for Retails investor is Rs. 5000 and in multiple of Re. 1 thereon, thereafter up to Rs. 200000. For HNI it is Rs. 200001 and in multiples of Re. 1 thereon thereafter and for others it is minimum Rs. 10 crore and in multiple of Re. 1 thereon, thereafter. This plan has no entry or exit load and will fall under Growth Plan.
Retail Individual Investor and Qualified Institutional Buyers (Retirement Funds) Portion: At least 70% (Seventy percent) of the Maximum Amount to be Raised (if any) as stated in Section III – Further Fund Offer 4 plus any under subscribed portion of Anchor Investor, shall be available for allocation to Retail Individual Investors and Qualified Institutional Buyers (Retirement Funds) on a proportionate basis in the manner set out in the Supplement to SID at the discretion of the AMC.
FFO 4 Units will rank pari-passu to the existing Units of the CPSE ETF.
Post allotment, units will be listed at BSE and NSE.
The CPSE ETF, which will be managed by Reliance Mutual Fund, has a concentrated portfolio spread across a few sectors i.e. energy, oil PSU, infrastructure & engineering and PSU financials. Top four holdings of the scheme — ONGC, Indian Oil, Coal India and NTPC — accounts for 77.7 per cent of the portfolio.
In terms of valuations, the Nifty CPSE Index trades at a PE (Price to Earnings) ratio of 8.43 compared to the Nifty 50 PE of 26.32. It offers a dividend yield of 5.52 compared to Nifty 50's 1.25 per cent based on current data.
All the previous four CPSE ETF issues have received a good response from investors, with the fund house refunding extra subscriptions. The new fund offer of CPSE ETF was first launched in March 2014 in which the fund house mobilized Rs 4,363 crore. CPSE ETF's further fund offer (FFO) was launched in January 2017, where it collected Rs 13,705 crore, out of which the fund refunded Rs 7,705 crore due to the issue size limit of Rs 6,000 crore. CPSE ETF further fund offer (FFO 2) in March 2017 collected Rs 10,083 crore, out of which Rs 7,583 crore was refunded to investors due to the issue size limit of Rs 2,500 crore. CPSE ETF further fund offer (FFO 3) was launched in November 2018 and collected Rs 31,203 crore, out of which Rs 14,203 crore was refunded to investors due to limited issue size of Rs 17,000 crore. So far the biggest transaction on sale of CPSE ETF took place in November 2018.
CPSE ETF is a passive investment fund that was created to help the government in its disinvestment program of divesting stake in select Central Public Sector Enterprises (CPSE) through Exchange Traded Funds (ETF). The fund invests in the Nifty CPSE Index stocks - that includes eleven PSU companies (Maharatnas, Navratnas, Miniratnas, Sector Leaders) selected on the basis of established track record, government holding, market capitalization, dividend history, sector representation, etc. - in the same proportion and weightage as of the index.
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 proportion as 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.
CPSE ETF NFO, FFO & FFO 2 received overwhelming response as its collection was ₹4,363 Crs, ₹13,705 Crs and ₹10,083 Crs respectively, out of which ₹1,363 Crs, ₹7,705 and ₹7,583 Crs respectively was refunded to investors due to the limited issue size of ₹3,000, ₹6000 Crs and ₹2,500 Crs respectively. This time for CPSE ETF FFO3 the base limit is ₹8000 cr. and the Fund has permission to keep oversubscription up to 75% of the base size i.e. ₹6000 cr. thus making the overall fund offer of ₹14000 cr. All these ETFs are listed on BSE and NSE.
As of 17th March 2019 composition of CPSE ETF is as under:
Oil & Natural Gas Corporation Ltd.
Coal India Ltd.
Indian Oil Corporation Ltd.
Power Finance Corporation Ltd.
Bharat Electronics Ltd.
Industrial Capital Goods
Oil India Ltd.
NBCC (India) Ltd.
NLC INDIA Ltd.
Investors looking for safe long term investment may consider investment in this issue. (Subscribe for long term).
Allotment price of CPSE ETF FFO4 is set at Rs 25.4840. Retail investors who has applied for Rs 2L shares recieved 7848 units.
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