CPSE ETF NFO Opens on 18th March 2014

Published on Friday, March 14, 2014 by Dilip Davda | Modified on Wednesday, July 22, 2015

The long waited CPSE (Central Public Sector Enterprise) ETF is now all set for soft launch next week. Goldman Sachs, who got the mandate from the Government of India for marketing of CPSE ETF, has announced the details of the NFO that is opening for subscription for Anchor Investment on 18.03.14 and for Non-Anchor investors from 19.03.14 to 21.03.14.

CPSE ETF is a unique opportunity for investors to invest in 10 Maharatnas, Navratnas and Miniratnas at a discount of 5% on the “Reference Market Price” of the underlying shares of CPSE Index, which will be offered to the CPSE ETF by the Government of India. 6.66% Loyalty Units (One Loyalty Unit will be allocated for every 15 Units held) for eligible Retail Individual Investors holding the units continuously from the Allotment Date to the Loyalty Unit Record Date, which will be one year from the NFO allotment date. The non-anchor investors NFO closes on 21st March 2014. Scheme reopens for continuous subscription and redemption on or before 11th April 2014.

Providing portfolio diversification through investment in blue-chip public sector enterprises, CPSE ETF is a play on India’s growth story through the largest companies in the core sector. The CPSE Index constituents are as follows: Oil & Natural Gas Corporation Ltd., GAIL (India) Ltd., Coal India Ltd., Rural Electrification Corporation Ltd., Oil India Ltd., Indian Oil Corporation Ltd., Power Finance Corporation Ltd., Container Corporation of India Ltd., Bharat Electronics Ltd. and Engineers India Ltd.

The CPSE Index is constructed in order to facilitate the Government of India’s initiative to disinvest some of its stake in selected CPSEs through the ETF route. As per data published by the index service provider, as of 13th March 2014, the CPSE index had a PE ratio of 10.52 and dividend yield of 3.51%.

Retail Individual Investors can invest a minimum of Rs. 5,000 and in multiples of Re. 1 thereafter up to Rs. 200,000. Non Institutional Investors/ QIBs can invest a minimum of Rs. 200,001 and in multiples of Re. 1 thereafter. Maximum Amount to be raised during the NFO will be Rs. 3,000 crore subject to maximum of 3% of the paid up share capital of each of the constituents of the CPSE Index. The entry and exit load is nil. CPSE ETF offers Tax Benefits as the Scheme is in compliance with the provisions of Rajiv Gandhi Equity Savings Scheme, 2013 (‘RGESS’).

Although it is observed that except Gold ETF, other ETF schemes have failed to attract retail investors, but this being the novel concept of a pack of leading listed PSU under ETF, it is felt that the retail investors will definitely stand to benefit with minimum of 9%+ tax free returns in first year and if loyalty bonus component is taken into consideration, then the return is above 15% which is definitely far better than tax free bonds, inflation index bonds or FDs. As this ETF consists 10 listed PSU scrip, it also spreads risk of holding in any single PSU and thus a safe bet one should not miss during NFO period. Thereafter it will be available for investment on bourses in secondary market.

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About Author

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. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com


28. anil   I Like It. |Report Abuse|  Link|Apr 29, 2014 5:49:00 AMReply
hold or sell
27. Nilesh   I Like It. |Report Abuse|  Link|Apr 10, 2014 6:51:45 PMReply
Is the refund for not allotted units out?
26. DURAISWAMY   I Like It. |Report Abuse|  Link|Apr 6, 2014 5:04:01 PMReply
Issue price is 17-45 . It listed on 4-4-2014. Closing price 19.35
25. Hari   I Like It. |Report Abuse|  Link|Apr 4, 2014 9:13:45 PMReply
No discount offered to retailer I assume. Anybody having any idea abount discount to retailer.
24. Raj   I Like It. |Report Abuse|  Link|Apr 4, 2014 5:31:19 PMReply
Issue price for all investor is 17.45? Why no separate discount to retail investors
23. ashok   I Like It. |Report Abuse|  Link|Apr 4, 2014 2:27:17 PMReply
Issue price for retail investor is Rs 17.4504
22. manoj jain   I Like It. |Report Abuse|  Link|Apr 4, 2014 12:17:53 PMReply
can anybody tell what is the issue price to retail investor and qib/nii , since they offered 5% discount to retail investor
21. jigaReligare   I Like It. |Report Abuse|  Link|Apr 4, 2014 11:22:15 AMReply
listined today
19 rs
huge profit
of 9%...............
20. Viral   I Like It. |Report Abuse|  Link|Apr 3, 2014 1:48:54 PMReply
Dude... Chck the Demat... Allotment already done....
19. Anshul   I Like It. |Report Abuse|  Link|Apr 2, 2014 1:45:26 PMReply
Dude, the order status is under process. No units allotted, so no question of demat allocation!
18. punit   I Like It. |Report Abuse|  Link|Apr 2, 2014 1:33:03 PMReply
on icici just go to demat allocation and click on allocate , it wil reflect there..
17. Anshul   I Like It. |Report Abuse|  Link|Apr 2, 2014 1:21:10 PMReply
Allotment is still not reflecting on ICICI Direct where as some brokerages are showing the allotted units. Any idea where we can get the allotment status?
16. RK Rahul Kothari   I Like It. |Report Abuse|  Link|Apr 2, 2014 12:58:48 PMReply
yes really today rate around 20.00 maybe in 1 lakh application profit might be 15000.00 and which is listing date. today i listing that listing as on 4-4-2014
15. JIGARELIGARE   I Like It. |Report Abuse|  Link|Apr 1, 2014 5:45:29 PMReply
There has been some criticism on that front but then the returns are comparable
or better than the benchmark indices," the finance ministry official said,
adding that investors have got return of 14.5% in just five days under the
scheme. "The allotment was made atRsRs17.45 per unit and the current price is
Rs20," he said

Read more at:
14. RAKESH   I Like It. |Report Abuse|  Link|Apr 1, 2014 1:27:08 PMReply
Where to see allotment status? and do any body idea when it would be listed?
13. jpmd   I Like It. |Report Abuse|  Link|Apr 1, 2014 12:31:30 AMReply
allotment is out

12. khodidas   I Like It. |Report Abuse|  Link|Mar 21, 2014 7:29:49 PMReply
If anyone want form pls contact on facebook khodidas somaiya
11. Monty Garg   I Like It. |Report Abuse|  Link|Mar 20, 2014 9:19:49 AMReply
Hey, I am also on Axis Bank.
It was not showing in the morning but started to show in the evening, it is on second page on NFO
10. janak patel   I Like It. |Report Abuse|  Link|Mar 19, 2014 4:13:20 PMReply
It is under RGES without locking of 3 years. ? How it is possible ? This eill effect year 2013-14 or 2014-15 ? any body know please share.
9. janak patel   I Like It. |Report Abuse|  Link|Mar 19, 2014 4:11:27 PMReply
In AXIS BANK LTD. NFO is not shown so we are not able to apply on line in AXIS BANK LTD. Now please tell me how it is apply.
8. RK   I Like It. |Report Abuse|  Link|Mar 19, 2014 2:13:31 PMReply
in this nfo how many percentages listing gain?
7. Pranav Parekh   I Like It. |Report Abuse|  Link|Mar 19, 2014 1:55:46 PMReply
I cant get the forms.... please guide me how do i get the forms.
6. SHUBHAM AGARWAL   I Like It. |Report Abuse|  Link|Mar 19, 2014 1:37:32 PMReply
5. vijay   I Like It. |Report Abuse|  Link|Mar 19, 2014 12:24:30 PMReply
4. Zabihullah M Khan   I Like It. |Report Abuse|  Link|Mar 19, 2014 11:18:53 AMReply
for filling CPSE
3. khodidas   I Like It. |Report Abuse|  Link|Mar 18, 2014 8:07:22 PMReply
CPSE opens on 19 closes on 21 march
2. khodidas   I Like It. |Report Abuse|  Link|Mar 18, 2014 8:06:41 PMReply
Where ru from
1. hemant k jha   I Like It. |Report Abuse|  Link|Mar 17, 2014 4:31:32 PMReply
How to apply/