Bharat-22 ETF launched; government eyes Rs 8000 crore

Marco Green
November 14, 2017

The NFO received subscriptions from across the board including mutual funds, foreign portfolio investors, insurance and retirement funds.

As much as 25 percent of the total issue size, or Rs 2,000 crore, was reserved for anchor investors who put in bids worth about Rs 12,000 crore, ICICI Prudential MF said.

The Narendra Modi government has set a disinvestment target of Rs 72,500 crore for the current fiscal, of which Rs 46,500 crore is to be raised through disinvestment mode, 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.

This is expected to benefit long term and retail investors by providing an opportunity of participation in equity stocks of the government run companies and earn stable returns, he added. The companies are National Aluminium Company, Oil and Natural Gas Corporation, Indian Oil Corporation, Bharat Petroleum Corporation, Coal India, State Bank of India, Axis Bank, Bank of Baroda, Rural Electrification Corporation, Power Finance Corporation, Indian Bank, ITC, Larsen and Toubro, Bharat Electronics, Engineers India, NBCC (India), Power Grid Corporation of India, NTPC, GAIL (India), NHPC, NLC India and SJVN. Unlike actively managed funds, it has a very low expense ratio of up to 1 bps (1 bps=0.001 per cent). We take a look at the fund which is part of the government's divestment programme.

Through the ETF, ICICI Prudential AMC proposes to raise an initial amount of Rs 8,000 crore plus additional amount subject to approval from the Government.

ICICI Prudential provides four reason for investing in this ETF.

"The strength of this ETF lies in the specially created Index S&P BSE BHARAT-22 INDEX. The ETF is well diversified with investments across six core sectors and offers good prospects for investors", said Neeraj Kumar Gupta, Secretary, Department of Investment and Public Asset Management (DIPAM).

These stocks will have a weightage based on free float market capitalisation with maximum weight to sector and stock of 20 per cent and 15 per cent, respectively, at the time of the annual rebalancing in March each year.

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