Bharat ETF 1-day issue oversubscribed 10 times, government to retain Rs 10k crore

The Bharat 22 ETF issue has been subscribed over 10 times and the government will retain about Rs 10,000 crore as divestment proceeds from the additional offering period of the exchange traded fund.

Additional offering of Bharat 22 ETF was opened for a day on Thursday. The base issue size was fixed at Rs 3,500 crore. 

The issue received overwhelming response from all categories of investors including retail investors. The issue was oversubscribed over 10 times of base issue size till 7 p.m. and received about Rs 40,000 crore. The government has decided to retain about Rs 10,000 crore as its divestment proceeds, said the Finance Ministry.

The government, struggling to fill the gaps in the disinvestment goal of Rs 80,000 crore, will use the proceeds for meeting the target in current fiscal which is at Rs 35,500 crore now without this proceeds.

Since its launch in November 2017, the government has raised Rs 22,900 crore through Bharat22 ETF through two tranches.

The government offered additional units of Bharat 22 Exchange-Traded Fund (ETF) on Thursday. The follow-on offer of Bharat 22 ETF - comprising shares of 22 public sector companies - is as part of the disinvestment program announced by the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance. 

Thursday`s follow-on offer is the third tranche of sale of the Bharat 22 ETF. The government planned to raise Rs 3,500 crore via sale of additional units of Bharat 22 ETF. The proceeds from the Bharat 22 ETF sale would help the government move towards meeting its disinvestment target of Rs 80,000 crore for the current fiscal year.

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The S&P BSE Bharat 22 Index is designed to measure the performance of select companies disinvested by the central government according to the disinvestment program. It is a highly liquid index - more than 99 per cent of index constituents are available under Futures & Options (F&O), HDFC Securities said in a research note.

Launched in August 2017, the Bharat 22 ETF comprises six sectors (basic materials, energy, finance, FMCG, industrials and utilities) and is rebalanced annually.