Govt to launch Bharat-22 ETF follow on offer in Feb, to raise Rs 10,000 cr

The government is planning to raise about Rs 10,000 crore through a follow on offer of Bharat-22 ETF in February, an official said. "Plans are on for launching the third tranche of Bharat-22 ETF around February. The offer is likely to have a base issue size of Rs 5,000 crore, with a green-shoe option to retain an over-subscription of equal amount, taking the total issue size to Rs 10,000 crore," the official told PTI.

The government has so far raised Rs 22,900 crore through the Bharat-22 exchange traded fund (ETF). While Rs 14,500 crore was raised in November 2017, another Rs 8,400 crore was raised in June 2018. The official said there would be a need to rebalance the ETF after the third tranche as the government holding in certain CPSEs in the basket could fall below 53 per cent.

The Central Public Sector Enterprises (CPSEs) that are part of the Bharat-22 ETF include ONGC, IOC, SBI, BPCL, Coal India and Nalco.  Other constituents include 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.

Also, the government's strategic holding in Axis Bank, ITC and L&T held through SUUTI (Specified Undertaking of Unit Trust of India) has been put in the ETF basket. Last month, the government had raised Rs 17,300 crore through a follow on offer of another exchange traded fund -- CPSE ETF, which comprises shares of 11 public sector enterprises.

As against the budgeted disinvestment target of Rs 80,000 crore, the government has so far raised Rs 34,000 crore by selling minority stake in CPSEs and ETFs.