Government decides to go slow on global ETF plans

Government decides to go slow on global ETF plans
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New Delhi, Jan 1: The government has put plans to go in for a global exchange-traded fund (ETF), aimed at boosting its share sale programme, on the back burner for now as fund managers have pointed to several risks involving such an entity, an official said.
“We are not planning a global ETF now. We will have to examine the issue in detail,” said an official at the department of investment and public asset management (Dipam), the finance ministry wing that oversees the government’s divestment programme. The official said that during roadshows in several markets, it was pointed out that it is very tough for cross-border listing in case of a global ETF. There are also risks related to currency and other regulatory issues that may not make it a viable option.
The government had planned to take its disinvestment programme overseas with an ETF, which would have helped it to meet its target of raising Rs 80,000 crore from share sales in state-run companies as well as tap into a wider investor base. On October 5, it was reported that the government is eyeing a global ETF.
The move had come against the backdrop of a choppy domestic stock market, which has prompted the Centre to go slow on some of the proposed initial public offers and follow-on issues of state-run firms. The government has to cut its stake in several listed companies to 75% to meet stock market regulator Sebi’s norms.
Authorities had explored options to list the ETF in major stock exchanges globally.
The official said the next move would now be to assess the appetite among foreign investors for such an instrument and make them invest here rather than experiment of going overseas.