What is Bharat 22? Further Fund Offer of Bharat – 22 ETF Resounding Success (Download PDF)

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2nd tranche of Bharat 22 ETF was subscribed 2.3 times on final day of offering, w/issue garnering subscription to tune of Rs. 14,000 cr. Thru Bharat 22 ETF, comprising shares of 22 companies, govt. had targeted to mop up Rs. 6,000 cr. w/green-shoe option of another Rs. 2,400 cr.

Image of The Index Constituents

Image of The Index Constituents

Image of The Index Constituents

What is Bharat 22 ETF

  • Govt. had launched new fund offer (NFO) of Bharat 22 ETF comprising shares of 22 companies, including public sector undertakings (PSUs), public sector banks, ITC, Axis Bank & L&T in November last year.

  • Bharat 22 ETF is open-ended exchange traded fund which will invest in similar composition & weightages as they appear in Bharat 22 Index.

  • State-owned companies that are part of ETF include ONGC, IOC, SBI, BPCL, Coal India & Nalco.

  • Other central public sector enterprises on list are Bharat Electronics, Engineers India, NBCC, NTPC, NHPC, SJVNL, GAIL, PGCIL & NLC India. Only 3 public sector banks – SBI, Indian Bank & Bank of Baroda – feature in Bharat 22 index.

  • Fund had garnered bids to tune of Rs. 32,000 cr. , although govt. retained only Rs. 14,500 cr.

Success of Bharat 22

  • Subscription has come in for 2.3 times of base issue size of Rs. 6,000 cr. Total bids worth Rs. 14,000 cr. were received on last day.

  • Issue seen resounding success w/FFO (follow-on fund offer) attracting applications aggregating nearly Rs. 14,000 cr. Issue saw wide participation from Foreign Institutional Investor under Anchor, QIB category.

  • Units of scheme will be allotted to various category of investors including Anchor Investors, Retail Institutional Investors, Retirement Funds, Qualified Institutional Buyers (QIBs) & Non Institutional Investors.

  • Govt. will exercise green-shoe option & retain additional Rs. 2,400 cr. worth bids received.

  • Govt. had launched follow-on fund offer of Bharat 22 ETF, which is managed by ICICI Prudential Mutual Fund on 19th June.

  • In anchor investor category, offering was subscribed 3.4 times raising more than Rs. 5,000 cr.

  • For non-anchor investor segment, bids worth Rs. 9,000 cr. are subscribed.

  • Despite challenging market in year 2018, ETF has garnered very strong subscription w/encouraging response from FIIs (who have subscribed to extent of Rs. 7,500 cr.

  • W/more than one lakh retail applications received, GoI’s FFO of Bharat 22 ETF witnessed wide retail participation.

  • Govt. plans to raise Rs. 80,000 cr. in current fiscal from disinvestment, lower than over Rs. 1 lakh cr. raised last year.

What is Exchange Traded Fund (ETF)

  • ETF is open-ended mutual fund scheme w/objective track & reflect performance of its underlying index. It achieves thru passive investment strategy of investing in same stocks & in same proportion as they constitute underlying index.

Advantages of ETF

  • Investments in ETFs are highly liquid as they are held thru Demat account & can be traded on stock exchange like direct equity shares.

  • They have lower expense ratios in comparison to actively managed mutual funds.

- Published/Last Modified on: September 11, 2018

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