Bharat 22 ETF: Govt gets Rs 10,000 crore from additional offering

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New Delhi | Published: February 15, 2019 6:02:09 AM

With the additional offering of the diversified Bharat-22 ETF receiving an overwhelming response on Thursday, the Centre has increased the ETF offer size by 2.8 times to retain Rs 10,000 crore, helping it to inch closer to the FY19 disinvestment target of Rs 80,000 crore.

bharat ef, industryThe receipts from the latest Bharat ETF tranche would take the proceeds from ETFs to Rs 35,325 crore or 70% of the total disinvestment receipts of about Rs 50,000 crore so far in FY19.

With the additional offering of the diversified Bharat-22 ETF receiving an overwhelming response on Thursday, the Centre has increased the ETF offer size by 2.8 times to retain Rs 10,000 crore, helping it to inch closer to the FY19 disinvestment target of Rs 80,000 crore.

Investors had put in bids worth `40,000 crore or 11.4 times of the Bharat 22 ETF’s base offer size of of Rs 3,500 crore in the one-day offering. The total bids could exceed by a few thousand crore rupees when all the retail and institutional bids are tabulated by 8pm on Thursday.

“Keeping in mind that government holding in three PSU stocks (EIL, Nalco and REC) are at the threshold of 52% (the minimum government holding for PSUs in the ETF), we have decided to retain `10,000 crore,” an official told FE.

The receipts from the latest Bharat ETF tranche would take the proceeds from ETFs to Rs 35,325 crore or 70% of the total disinvestment receipts of about Rs 50,000 crore so far in FY19.
The robust pipeline of transactions, including a large PSU-to-PSU deal and about half a dozen buybacks by PSUs, will ensure that the target be met without too much reliance on private/retail investors in the remainder of the year.

At least `14,000 crore is assured from Power Finance Corporation’s proposed purchase of the Centre’s 52.63% stake in Rural Electrification Corporation, for which the Cabinet has already accorded an in-principle nod. Of Rs 12,000 crore expected from buybacks by PSUs, the Centre has already mopped up about Rs 4,000 crore and the remaining `8,000 crore would flow in by March. The companies that will undertake buybacks include ONGC, Coal India, Indian Oil and Oil India.

With ETFs proving to be an effective disinvestment tool even under not-so-favourable market conditions, the Centre had raised Rs 8,325 crore in the first FFO of Bharat 22 in June 2018. In the biggest divestment transaction via ETFs, the Centre mopped up `17,000 crore in November 2018 as against the CPSE ETF’s FFO-3 base offer of Rs 8,000 crore.

In the maiden offer of the diversified Bharat 22 ETF (which invests in 22 stocks including CPSEs, public sector banks and some private blue chip companies such as ITC, Axis Bank and L&T), the Centre had raised `14,500 crore in FY18. The CPSE ETF consists of 11 state-run firms.

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