Centre gets Rs 14,500 crore from Bharat-22 ETF, issue subscribed 4 times

Govt Rs 20,000 cr short of disinvestment target with four months of FY18 left

The government’s Bharat-22 exchange traded fund (ETF) has garnered Rs 14,500 crore, officials said on Monday. 

With this, the Centre’s disinvestment proceeds for 2017-18 has reached Rs 52,500 crore, higher than the 2016-17 revised estimate of Rs 45,500 crore, and Rs 20,000 crore short of this year’s budgeted estimate of Rs 72,500 crore. Four more months are still left for the financial year to end.

The new fund offer of (NFO) of Bharat ETF was subscribed four times and saw demand worth nearly Rs 32,500 crore, Department of Investment and Public Asset Management (DIPAM) Secretary Neeraj Gupta said in a media briefing. 

While the initial amount to be raised through the ETF was fixed at Rs 8,000 crore, the Centre decided to increase the size to Rs 14,500 crore, mostly to accommodate retail investors and pension funds, Gupta said. “The overwhelming response for Bharat 22 shows that there is a lot of confidence in the India growth story, and demonstrates the belief in the reforms being undertaken across sectors.”

The portion reserved for retail investors was subscribed 1.45 times, while the portion for institutional investor was subscribed seven times. All the investors who applied in the NFO were given a discount of three per cent over the market reference rate, Gupta said.

The Bharat-22 ETF has companies from six sectors. The constituents of the basket are Nalco, ONGC, IndianOil, Bharat Petroleum, Coal India, State Bank of India, Axis Bank, Bank of Baroda, Rural Electrification Corp, Power Finance Corp, Indian Bank, ITC, Larsen & Toubro, Bharat Electricals, Engineers India, NBCC, PowerGrid, NTPC, Gail India, NHPC, NLC India and SJVN Ltd. This compares with 10 stocks in the first CPSE ETF, launched in early 2014, and drawing mostly from the energy space.

The Bharat-22 ETF has been the biggest share sale by the government this fiscal year, followed by the Rs 11,500-crore initial public offering (IPO) of General Insurance Corporation of India, and Rs 9,600-crore IPO of New India Assurance.

In the backdrop of expected tax revenue shortfall of Rs 20,000 crore due to revisions in goods and service tax rates, the finance minister would increasingly depend on revenue heads like disinvestment to adhere to a strict fiscal deficit target for 2017-18. And by all accounts, for the first time since 2009-10, stake sale proceeds might exceed the budgeted estimate.

The year’s total budgeted disinvestment target of Rs 72,500 crore is the highest for any fiscal year. On tap is state-owned energy behemoth ONGC’s acquisition of HPCL that could give the exchequer more than Rs 30,000 crore. There are still a number of initial public offerings, offer-for-sales, and buybacks which the Centre could fall back on.

DIPAM is working with defence and rail ministries on a number of market debuts, including that of IRCTC, IRFC, IRCON, Hindustan Aeronautics, Garden Reach Shipbuilders, Bharat Dynamics and Mazagaon Dockyards. For the rest of the year, DIPAM is working on offer-for-sale proposals, said government sources. It is planning to offload 10 per cent stake in NHPC, Power Finance Corporation and SAIL, 15 per cent in NLC, five per cent in Rural Electrification Corporation and three per cent in IndianOil. It has already sold a 7 per cent stake in NTPC in August.