Fin min mulls exchange traded fund for sell-offs
The finance ministry is mulling setting up of an exchange traded fund (ETF) for selling shares of state-owned companies as part of steps to meet the disinvestment target of Rs. 30,000 crore in the current fiscal.business Updated: Jul 08, 2012 22:00 IST
The finance ministry is mulling setting up of an exchange traded fund (ETF) for selling shares of state-owned companies as part of steps to meet the disinvestment target of Rs. 30,000 crore in the current fiscal.
"The disinvestment department is considering setting up of an exchange traded fund in the format of Hong Kong Tracker Fund and has floated a concept note for implementing it," a top official in the ministry said.
The department is planning to create a pool of shares of the PSUs it wants to divest and create a fund (ETF), which would be listed on stock exchanges.
The ETF, which is an investment fund traded on stock exchanges much like stocks, would have an underlying benchmark which could be an index on the stock exchange.
The government is pursuing the concepts of "after the offer for sale (OFS)" and "Institutional Placement Programme (IPP)" models to meet the divestment target.
IPP and OFS are two new share sale tools introduced by market regulator Securities and Exchange Board of India (SEBI) in January this year to help corporates increase their public shareholding.
These two models would also help companies achieve the mandatory minimum 25% public holding by June, 2013.