Govt to sell stake in 22 companies

To pare holdings in private as well as public sector units

The government announced on Friday the launch of its second exchange-traded fund (ETF), Bharat 22, which will comprise 22 stocks including those of central public sector enterprises (CPSEs), public sector banks and its holdings under the Specified Undertaking of Unit Trust of India (SUUTI).

Finance minister Arun Jaitley said the ETF will have a diversified portfolio of companies from six sectors with a 20% cap on each sector and a 15% cap on each stock.

“While selecting each of these sectors, we have kept in mind sectoral reforms which have had direct impact on the valuation of these shares... We believe that this ETF will be a fairly successful one,” Jaitley said.

ETFs are essentially index funds that are listed and traded on exchanges like stocks. An ETF is a basket of stocks with assigned weights that reflects the composition of an index.

Through the first CPSE ETF launched in March 2014 and currently managed by Reliance Cap- ital Ltd, the government raised ~8,500 crore, selling in three tranches.

It consisted of stocks of 10 public sector entities — Oil and Natural Gas Corp Ltd (ONGC), Coal India Ltd, Indian Oil Corp Ltd (IOC), GAIL, Oil India Ltd, Power Finance Corp Ltd (PFC), Bharat Electronics Ltd (BEL), Rural Electrification Corp Ltd (REC), Engineers India Ltd and Container Corporation of India Ltd.

The government holds an 11.17% stake in ITC Ltd, 8.16% in Larsen & Toubro Ltd and 11.53% in Axis Bank Ltd through SUUTI, an offshoot of the erstwhile state-run investment firm Unit Trust of India.

Neeraj Gupta, secretary of the Department of Investment and Public Asset Management, did not reveal how much the government is targeting to raise through the new ETF or the timing of its launch.