Bharat-22 ETF follow-on offer could be worth Rs10,000 crore

The government had in November last year launched Bharat-22 ETF comprising shares of 22 companies, including public sector undertakings (PSUs), public sector banks, ITC, Axis Bank and L&T. Photo: Bloomberg

The government had in November last year launched Bharat-22 ETF comprising shares of 22 companies, including public sector undertakings (PSUs), public sector banks, ITC, Axis Bank and L&T. Photo: Bloomberg

New Delhi: The finance ministry may come out with a Rs10,000-crore follow-on fund offer of the Bharat-22 exchange traded fund (ETF) as it looks to dilute stake in Coal India to meet the minimum public holding norm.

Besides, the ministry is keen to take the ETF route to sell off government shares held through the Specified Undertaking of the Unit Trust of India in private companies (SUUTI)—ITC, Axis Bank and L&T, an official told PTI.

The government had in November last year launched Bharat-22 ETF comprising shares of 22 companies, including public sector undertakings (PSUs), public sector banks, ITC, Axis Bank and L&T. The fund had garnered bids to the tune of Rs32,000 crore, although the government retained only Rs14,500 crore.

An official said the ETF route is a safer mode of disinvestment as it shields investors against stock market volatility. “Based on the current composition of the Bharat-22 ETF, the leg room for a follow-on fund offer would be around Rs10,000 crore,” the official added.

The state-owned companies or PSUs that are part of the new Bharat ETF-22 include ONGC, IOC, SBI, BPCL, Coal India and Nalco. The other central public sector enterprises on the list are Bharat Electronics, Engineers India, NBCC, NTPC, NHPC, SJVNL, GAIL, PGCIL and NLC India. Only three public sector banks—SBI, Indian Bank and Bank of Baroda—figure in the Bharat-22 index.

The official said, by using the ETF route, the government may dilute about 3.55% stake held in Coal India to comply with the minimum 25% public float requirement as mandated by the Securities and Exchange Board of India.

The government plans to raise Rs80,000 crore in the current fiscal from disinvestment, lower than over Rs1 trillion raised last year.

Prior to the launch of Bharat-22 ETF, which has a diversified portfolio, the government had floated the CPSE ETF comprising stocks of 10 bluechip PSUs—ONGC, Coal India, IOC, GAIL (India), Oil India, PFC, Bharat Electronics, REC, Engineers India and Container Corporation of India.

Through the CPSE ETF, the government had raised Rs11,500 crore in three tranches, with Rs3,000 crore from the first tranche in March 2014, Rs6,000 crore from the second tranche in January 2017 and Rs2,500 crore from the third tranche in March 2017.

First Published: Tue, Apr 17 2018. 03 15 PM IST

Source: livemint