Govt scouts for advisors to launch trade fund for PSUs

The Department of Disinvestment (DoD) will soon appoint advisors for setting up an Exchange Traded Fund (ETF) for selling shares of PSUs to meet the disinvestment target of Rs 30,000 crore.

“Merchant bankers, investment bankers, consulting firms and asset management companies, who have advised or have been involved in a relevant capacity or have launched an equity ETF could be made eligible (as advisor),” officials said.

The government will soon float an expression of interest for appointment of advisors for moving ahead with its proposal to attract investors by setting up an ETF for central public sector enterprises.

As per the request of proposal to be floated by the DoD, the bidders of global merchant bankers should have advised or have been involved in a relevant capacity or have launched an equity ETF of the size of Rs 1,000 crore or more between September 2009 and  June 2012.

An inter-ministerial group (IMG) on creation of ETF comprising CPSE shares, met earlier this month and discussed the modalities. 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.

After the appointment of the advisor, the DoD would appoint an ETF provider, which will manage the fund on behalf of the government.  Under ETF model, the DoD 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.