Second tranche of Bharat Bond ETF receives bids worth Rs 10,000 cr

The second tranche of Bharat Bond Exchange Traded Fund (ETF) received bids estimated at Rs 10,000 crore, against base issue size of Rs 3,000 crore. The issue was open for subscription between July 14 and July 17.
 

“The second series of Bharat Bond ETF received an outstanding response… estimated collection around Rs 10,000 crore with wide participation across categories. Final numbers are still being tallied and will be released by Monday,” secretary for Department of Investment and Public Asset Management (Dipam) tweeted on Friday.
 

The second series of ETFs were launched with a green-shoe option of an additional Rs 11,000 crore over and above the base issue size. A greens-shoe option allows sale of more units if the demand is higher than the base size.
 

The ETF is being managed by Edelweiss Asset Management Company (AMC). The two new ETF series have maturities of April 2025 and April 2031.
 

“Despite interest rate falling, weaker economic conditions and the concerns in pockets of debt mutual funds, we have been able to raise longer term money of five-year and eleven-year,” said Radhika Gupta, managing director and chief executive officer of Edelweiss AMC.
 

“Investors now understand that they don’t have to worry much about interest rate movements in targeted maturity structure, if they are holding onto the investments. Going ahead, these ETFs can also grow organically,” she added.
 

In December last year, the 2023 and 2030 ETF series were launched.
 

Given the lockdown conditions in various parts of the country, the NFO was largely digital-driven with roadshows conducted through virtual webinars. The collections were also largely driven through digital platforms, sources suggest.
 

For the series maturing in April 2025, the AMC had proposed to raise an initial amount of Rs 2,000 crore with a green-shoe option of Rs 6,000 crore. For series maturing in April 2031, the AMC proposed to raise an initial amount of Rs 1,000 crore with a green-shoe option of Rs 5,000 crore, depending on the market response.
 

The ETF invests in constituents of Nifty Bharat Bond Indices, consisting of AAA-rated public sector units. Bharat Bond Fund-of-Funds with similar maturities is also launched for investors without demat accounts.
 

Unlike other government ETFs, where investors can invest in equity shares of diverse government PSUs, Bharat Bond ETF allows investors to take exposure to a portfolio of debt papers of government-owned companies.