The much-awaited Bharat 22 Exchange Traded Fund (ETF) which opened for subscription last week got subscribed by nearly 4 times, helping the government to raise the issue size to Rs 14,500 crore and further moving towards its disinvestment target for the year. The government had launched the ETF with the larger objective to raise Rs 72,500 crore through disinvestment in the current financial year 2017-18, by selling equity stakes in blue-chip state-run firms and few private sector companies. DIPAM Secretary told ET Now, “We will not be breaching 51% government holding mark in any of the stocks. We have collected nearly Rs 52,000 crore from proceeds so far.” The heavy demand has also helped the government to raise the issue size by Rs 6,500 crore, thus increasing its revenue.
The Rs 8,000 crore public issue received bids to the tune of Rs 32,000 crore, according to department of investment and public asset management (DIPAM) secretary Neeraj Kumar Gupta. “The issue saw huge demand from FIIs,” Neeraj Kumar Gupta told adding that this indicates rising confidence in India growth story.
Neeraj Kumar also pointed out that the issue size of Bharat 22 ETF has been raised to to Rs 14,500 crore. Further, the government will retain a part of oversubscribed portion to satisfy retail investors and pension funds. Notably, the ETF consists of stocks of 22 companies including State Bank of India (SBI), Axis Bank, Larsen & Toubro (L&T), ITC, ONGC, Indian Oil Corporation (IOC), PFC, PGCIL, Nalco, BPCL, NTPC and Bank of Baroda.
The mega ETF includes as many as six sectors ranging from finance and utilities to FMCG. In the index, L&T has the highest weightage, followed by ITC and SBI. Many top experts including Nilesh Shah of Kotak had advised it as a long-term investment. “We believe the ETF offers an attractive long-term investment opportunity to partake in the India growth story by way of a diversified blend of companies spread across several sectors and are available at an attractive valuation and a good subscription discount,” ICICI Prudential AMC MD and CEO Nimesh Shah had said.
The government had offered a 3% discount to all category of investors on reference market price. “The ETF is a very innovative idea to capture the growth story of six most prominent sectors: Banking, FMCG, energy, industrial, basic materials and utilities,” Neeraj Kumar Gupta had earlier told Financial Express.
(First published on 20th November 2017 on www.financialexpress.com)