Bharat-22 ETF smashes past market record: Govt rakes in Rs 14,500 crore through sale of blue-chip stocks

The government has succeeded in raising Rs 14,500 crore through the Bharat-22 Exchange Traded Fund (ETF) which received bids worth a staggering Rs 32,000 crore, the highest ever for a mutual fund. The government had launched the Bharat-22 ETF comprising stocks of blue-chip public sector companies in August with plans to raise Rs 8,000 crore. However it had kept its option open to retain over-subscribed bids.

"We have decided to retain Rs 14,500 crore of the total subscription that has come in for Bharat-22 ETF," Department of Investment and Public Asset Management (DIPAM) Secretary Neeraj Gupta said. The fund saw bids worth nearly Rs 32,000 crore coming in, with foreign institutional investors (FIIs) accounting for one-third of the total.

The fund was launched for anchor investors on November 14, and the portion reserved for them was subscribed six times amounting to Rs 12,000 crore. The portion reserved for retail investors was subscribed 1.45 times; retirement funds -- 1.50 times and NIIs and QIBs -- 7 times. Anchor investors, for whom the share sale opened for subscription on November 14, subscribed 6.1 times of their portion amounting to Rs 12,000 crore.

LIC, Bank of India, SBI Pension Fund, EPFO and HDFC Ergo Insurance are among those who have put in bids in this category. The issue opened for subscription for retail investors from November 15-17. The portion reserved for retail investors was subscribed 1.45 times; retirement funds 1.50 times and NIIs and qualified institutional buyers (QIBs) seven times.

"During the three days reserved for non-anchor investors, we witnessed an overwhelming response from all investors, particularly retail segment. In due course, the ETF will be listed," ICICI Prudential AMC MD and CEO Nimesh Shah said. The ETF comprises stocks of 22 blue chip public sector companies, including State Bank of India (SBI), Axis Bank, Larsen & Toubro (L&T), ITC, ONGC, Indian Oil Corporation, PFC, PGCIL, Nalco, BPCL, NTPC and Bank of Baroda. The mega ETF spans six sectors ranging from finance and utilities to FMCG. In the index, L&T has the highest weightage, followed by ITC and SBI. The government had offered a 3% discount to all category of investors on reference market price.

ICICI Prudential AMC's Shah had said that 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 attractive valuation and a good subscription discount. The Bharat ETF IPO takes the total sum raised through disinvestment in the current financial year, including the listing of public sector insurance companies to Rs 52,500 crore.

The ETF's robust performance also brings the government closer to its disinvestment target of Rs 72,500 crore for 2017-18. Of the government's disinvestment target for the financial year, Rs 46,500 crore is to be raised through minority stake sale in PSUs and Rs 15,000 crore from strategic sale. Another Rs 11,000 crore is expected to come from listing of insurance companies.