The government will launch the Bharat 22 ETF (Exchange Traded Fund) on Tuesday with a target to garner about Rs 8,000 crore. The government will have the option to retain any additional amount that it mobilises. All categories of investors will be eligible for a discount of 3% to the reference market price of underlying constituents. Anchor investors can apply for a minimum of Rs 10 crore. Among non-anchor investors, retail investors can apply for Rs 5,000 and in multiples of Rs 1 thereafter up to Rs 2 lakh. Other non-anchor investors can apply for a minimum of Rs 2 lakh and in multiples of Rs 1 thereafter. The Bharat 22 ETF, comprises scrips of 22 companies including 19 public sector enterprises, which includes National Aluminium Company, Coal India, State Bank of India, Axis Bank, Indian Bank, Larsen and Toubro and Bharat Electronics among others.
ETF is a marketable security that tracks a basket of assets such as stocks. Unlike mutual funds, it trades like a stock. The ETF is a part of government’s disinvestment programme. The government had budgeted to raise Rs 72,500 crore in FY 17 through divestments in PSUs and the strategic sale of shares. So far the government has raised around Rs 38,000 crore so far from initial public offerings (IPOs), buybacks, offer for sale (OFS) and strategic divestments. Speaking at the launch of the ETF Anuradha Thakur, Joint Secretary of Department of Investment and Public Asset Management (DIPAM) said, the government is confident of meeting its disinvestment target.
The third tranche of the Central Public Sector Enterprises’ Exchange-Traded Fund (CPSE-ETF) which was launched in March 2017 saw a subscription worth Rs 9200 crore against the issue size of Rs 2500 crore. The government had raised Rs 6,000 crore in the second tranche of CPSE ETF in January 2017 and Rs 3,000 crore from the first tranche in March 2014. The issue will be open to anchor investors on November 14 and to non- anchor investors from November 15 to 17.