Bharat 22 ETF opens today, aims to raise Rs 8,000 crore

Bharat 22 ETF aims to bring broad-based ownership pattern to public sector enterprises: Department of Investment and Public Asset Management

The Bharat 22 Exchange Traded Fund (ETF) announced earlier this year as part of the government's disinvestment programme will open for investors on Tuesday and end on November 17.

With the initial issue size of Rs 8,000 crore, the ETF will open for anchor investors on Tuesday, for non-anchor investors on November 15, and close on November 17, Department of Investment and Public Asset Management (DIPAM) Joint Secretary Anuradha Thakur told reporters here.

"Bharat 22 ETF aims to bring broad-based ownership pattern to public sector enterprises. The disinvestment programme now forms the core of the government's investment strategy," she said.

"While the initial issue size for the ETF is Rs 8,000 crore, we can also consider going beyond looking at the response," she added.

A discount of 3 per cent has been offered to all categories of investors.

The Bharat 22 ETF comprises 22 companies, or investments, from among central public sector enterprises (CPSEs) and public sector banks (PSBs).

"The ETF is well diversified with investments across six core sectors, including industrials, finance, utilities, energy, FMCG (fast moving consumer goods) and basic materials, and offers good investment opportunity and expect an overwhelming response to this new fund offer," Thakur said.

No sector crosses the 20 per cent sectoral capping and there is a stock capping of 15 per cent.

An ETF is a traded security that tracks an underlying asset like a group of companies or commodity. The government had earlier approved the alternative mechanism through the ETF route to divest its stake in CPSEs.

The alternate mechanism will be used to take decisions for divestment through ETF for all listed CPSEs, subject to the government retaining a 51 per cent stake in them.

Apart from CPSEs and PSBs, Bharat 22 also includes the government's strategic holding in Axis Bank, ITC and L&T held through the Specified Undertaking of Unit Trust of India (SUUTI).

The Bharat 22 Index will be rebalanced annually. ICICI Prudential Asset Management Company (AMC) will be the ETF Manager and Asia Index Private Limited will be the Index Provider.

While the National Aluminium Co (NALCO) is the only firm in the basic materials category in the Bharat 22 ETF, the energy sector includes the giants ONGC, Indian Oil, BPCL and Coal India.

The finance sector companies include the State Bank of India and Axis Bank, where the government holds some stake, while the only firm included in the FMCG sector is ITC.

The government had raised Rs 8,500 crore through the CPSE ETF route in the last fiscal.

In his budget speech of 2017-18, Finance Minister Arun Jaitley had promised to use ETF as a vehicle for further disinvestment of shares. The Centre has a disinvestment target of Rs 72,500 crore for the current fiscal, of which Rs 46,500 crore is planned to be raised through disinvestment, while Rs 15,000 crore is the target in the case of strategic disinvestment that involves the surrender of government's majority control of the company.