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Saturday, October 27, 2012

ICICI Sec to counsel govt for public sector ETFs

The Department of Disinvestment has selected ICICI Securities (ICICI Sec) to act as its adviser to create and market the proposed central public sector enterprise (CPSE) exchange traded funds (ETFs).

Three other i-bankers — Citi, SBI Caps and Yuanta Fund — were in the fray for this.

The proposed PSU ETF will comprise shares of listed central PSUs and will act as an additional mechanism for the disinvestment process.

“Yesterday, we made a presentation to the Disinvestment department, after which we have been selected to act as the adviser to the process,” Vineet Arora, Executive Vice-President, ICICI Securities said, adding that the final mandate would follow later.

As per a notification on the Disinvestment department’s Website, i-banks, namely ICICI Securities, Citi, SBI Caps and Yuanta Fund, were asked to make presentations before the department on October 25 to form the CPSE ETF.

Arora said, after the company received the final mandate, it would work closely with the disinvestment department towards the creation of the PSU ETF.

“We hope that the PSU ETF will be launched in few months,” Arora said without divulging any detail regarding the fee structure for its advisory services.

About the responsibilities as an adviser, Arora said it would be helping the government create an ETF basket, which will comprise PSU shares, apart from assisting the government in the selection of AMCs, and launch and marketing of the ETF, among others.

The Centre has a budgeted target of Rs 30,000 crore from the disinvestment process this fiscal for which it has already initiated process for diluting its stake in some of the PSUs.

CPSE ETF is seen as another way of diluting government stake, barring the usual IPO, FPO or OFS route, which will help the government in meeting its disinvestment target along with increasing retail participation in the equity market.


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