The government is planning to raise Rs.7000 crore by divesting its stake in SUUTI companies.
The Ministry of Finance has appointed ICICI Prudential Mutual Fund to launch and manage the Specified Undertaking of Unit Trust of India (SUUTI) ETF, said sources privy to development.
Though the company is yet to receive the official confirmation from the Ministry of Finance, a source close to this development has confirmed that the fund house has won the bid to manage SUUTI ETF.
The SUUTI constitutes companies like Axis Bank, Larsen & Toubro (L&T) and Indian Tobacco Company (ITC). The government is planning to raise Rs.7000 crore by divesting its stake in these companies. Currently, the government holds stakes of 11.66% in Axis Bank, 8.8% in L&T and 11.27% in ITC worth nearly Rs. 60,000 crore.
Another source told Cafemutual that the Ministry of Finance has considered two parameters - quantitative and qualitative - for the selection of the fund house. While quantitative parameter evaluated the fund houses on the basis of a management fee it quoted, the qualitative parameter gauged ability and experience of fund houses to manage ETFs.
According to a media report, ICICI Prudential had quoted a bid price of 13 bps to manage SUUTI ETF.
“Though a PSU fund house had quoted the lowest bid price to manage SUUTI ETF, the government has appointed ICICI Prudential Mutual Fund on the basis of a few parameters like capability and previous experience to manage ETFs and competitive management fees,” said the source privy to development.
Last month, the government floated ‘The Request for Proposal’ in order to appoint a fund house to launch and manage the divestment of SUUTI through ETF route. Seven fund houses – UTI, SBI, ICICI Prudential, Birla Sun Life, Reliance, Kotak and a consortium of Sundaram and Edelweiss are reported to have put their bids for the SUUTI ETF by Mint.
Earlier this year, the finance ministry had given a mandate to Goldman Sachs AMC to launch and manage the central public sector enterprise (CPSE) ETF through which it had divested its stakes in 10 PSUs. The government had raised Rs. 3000 crore from this ETF.
