CPSE ETF Further Fund Offer 2 (FFO 2) Details

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 2 Allotment Price during the Further Fund Offer 2 (“FFO 2”) 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.

About Nifty CPSE Index
The Nifty CPSE Index is constructed in order to facilitate the Government of India’s (GOI) initiative to disinvest some of its stake in selected Central Public Sector Enterprises (CPSEs) through the ETF route. The index consist of 10 CPSEs with base date of 01- Jan- 2009.

As on February 28, 2017 the one year CAGR^ return of Nifty CPSE TRI* is 55.30% against 28.87% given by Nifty 50 TRI*.

^CAGR - Compounded Annual Growth Rate
*TRI - Total Returns Index reflects the returns on the index arising from (a) constituent stock price movements and (b) dividend receipts from constituent index stocks.

Details:

Background:
Government of India (GOI) used innovative route to divest its holding in CPSEs via ETF New Fund Offer (NFO)
- NFO was first launched in March 2014
- NFO received overwhelming response; NFO collection was Rs.4,363 Crs, out of which Rs.1,363 Crs was refund to investors due to limited issue size of Rs.3,000 Crs
- Participation across various categories of investors
- Units of CPSE ETF were listed on 04th April 2014 on NSE & BSE Further Fund Offer (FFO)
- FFO was launched in January 2017
- FFO received overwhelming response; FFO collection was Rs.13,742 Crs, out of which Rs.7,742 Crs was refund to investors due to limited issue size of Rs.6,000 Crs
- Participation across various categories of investors
- FFO Units of CPSE ETF were listed on 31st January 2017 on NSE & BSE
FFO 2 Investment Rationale:
- Play on India growth story through investment in the large CPSE stocks at attractive valuations
- Portfolio diversification through investment in blue-chip Maharatna and Navaratna CPSE stocks which are sector leaders
- FFO 2 price advantage – Upfront discount to all categories of investors
- Attractive Valuation and Dividend Yields: P/E ratio and dividend yields better compared to broader market index
- Flexibility of trading on real time basis
- Lower expense ratios and transaction costs
- Investors will be able to diversify exposure across a number of Public Sector companies through a single instrument

Reliance CPSE ETF FFO units are expected to be listed with effect from February 6, 2017.

The Reliance CPSE ETF FFO was a further fund offer meaning that the units of the original offer are already listed on the exchanges. The listing date of a FFO means that the units allotted under the offer would be available for trading with effect from the date of listing

For real time news and updates on the latest developments in Indian IPO markets, join Indian IPO Blog group on Whatsapp!

Send in name and city of residence to +91 79776 14821 OR Click here to join the Indian IPO Blog Whatsapp group now! (Free for early bird members)

Purchase price will be average of the full day volume weighted average price of the constituents of Nifty CPSE Index on NSE during Jan 18 and Jan 20.  

Based on this the price is expected to be around Rs.26.70. However, there is a 5% discount for retail investor which should bring the allotment price closer to Rs.25.50

Get real time updates and stay up to date with the latest developments in Indian IPO markets! Send in your request to join the group with your name and city to +91 79776 14821 OR Click here to join the Indian IPO Blog Whatsapp group now! (Free for early bird members -  First come first serve basis) 

Retail investors will get preference in the allotment of units in CPSE ETF and almost all of the bids would get accepted.

Retail investors will garner nearly half the allotment of the Rs 6,000 crore second tranche of CPSE Exchange Traded Fund. After retail investors, pension funds would get the preference

The Reliance Mutual Fund-managed Central Public Sector Enterprises - Exchange Traded Fund (CPSE ETF), which opened for subscription last week, was over-subscribed by 2.30 times