Reliance Nippon Asset Management Company on Tuesday announced Further Fund Offer 3 (FFO3) of its central public sector enterprises-exchange traded fund (CPSE ETF). It proposes to raise up to Rs 8,000 crore initially and an additional amount based on market response.
Also, an upfront discount of 4.5% is being offered to all categories of investors with the ETF having an expense ratio of 0.95 basis point. This third FFO will open and close for anchor investors on November 27, and for non-anchor investors, the offer will open on November 28 and close on November 30. Department of Investment and Public Asset Management (DIPAM) has appointed ICICI Securities as the adviser for the FFO3. The government had earlier raised Rs 11,500 crore in the earlier three tranches of the ETF.
“CPSE ETF has given opportunity to all classes of investors which has made it popular in India and abroad. It is mainly due to lower expense ratio and attractive discount. ICICI Securities brings insights of both institutional and retail investors,” said Shilpa Kumar, MD & CEO at ICICI Securities.
The fund invests in the Nifty CPSE Index stocks — that includes 11 PSU firms. “We feel confident that the timing of the issue will help investors benefit from their exposure in a diversified basket like CPSE ETF that includes a list of distinguished PSUs who are leaders in their respective sectors,” said Sundeep Sikka, ED and CEO, Reliance Nippon Life Asset Management.
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The FFO3 is open for all categories, including anchor investors, retail investors, retirement funds, QIBs, non-institutional investors and foreign portfolio investors. “We would like to reach out to retirement funds to invest in FFO3 and consider this as a chance to secure their funds and benefit from the growth of these PSUs, some of which are Navratnas, Maharatnas, Miniratnas and are either sector leaders or near monopolies in their respective sectors”, added Sikka. Nifty CPSE ETF Index in one year has given a negative return of 15.4% and the returns for five years has been 29.6%.
After the New Fund Offer (NFO) in 2014, the government decided to launch two more tranches in January and March 2017. Collection of CPSE ETF NFO, FFO & FFO 2 was Rs 4,363 crore, Rs 13,705 crore and Rs 10,083 crore, respectively, of which Rs 1,363 crore, Rs 7,705 crore and Rs 7,583 crore were refunded to investors due to the limited issue size of Rs 3,000 crore, Rs 6,000 crore and Rs 2,500 crore.
