Bharat Bond ETF raises over Rs 12,000 cr, oversubscribed 1.7 times

Sources said the offer saw strong response from retail investors, HNIs and NRIs

Bharat Bond Exchange Traded Fund (ETF), which is the country's first corporate bond ETF, has raised over Rs 12,000 crore through its new fund offer (NFO), getting an oversubscription of 1.7-times over its base issue of Rs 7,000 crore.

The ETF, which was launched on December 12, was floated in two series. For the three-year ETF, the mobilisation plan included Rs 3,000 crore of issue size and Rs 2,000 crore of greenshoe option. For the 10-year series, it included Rs 4,000 crore issue size, along with Rs 6,000 crore of greenshoe option.

According to sources, the government will take a call on whether it needs to exercise the greenshoe option to retain the excess subscription against the base issue.

Further, sources suggest that the ETF had seen strong participation from non-resident investors, high-networth investors, retail investors, top-tier corporates and foreign institutional investors.

"The response shows that there is enough investor appetite for debt products. Today, at least 70 per cent of debt flows are in short-term assets. This offering has pulled in significant long-term money," said Radhika Gupta, chief executive officer of Edelweiss Asset Management Company (AMC).

With the management fee of the ETF at a measly 0.0001 per cent, there were reservations about how the product will get wide distribution. Gupta says this has been a digitally-driven distribution. "All our digital partners whether it is Paytm Money, HDFC Securities, Zerodha or ICICI Securities, have facilitated this NFO."

The ETF was opened on December 12. On the first day, institutional investors participated to build the anchor book.

According to market sources, public and private sector banks, along with Life Insurance Corporation of India has participated in the anchor book of the ETF.

To allow access to investors without demat account, the ETF was also offered through a fund of fund structure by Edelweiss AMC.