Bharat Bond ETF third tranche to hit markets on December 3 to raise around Rs 5,000 crore

The third tranche of Bharat Bond ETF will be launched on December 3 to raise around Rs 5,000 crore to fund growth plans of Central Public Sector Enterprises, Edelweiss Asset Management said on Wednesday.

This new fund offer (NFO) will start on December 3, 2021, and end on December 9, 2021. The new series will mature on April 15, 2032.

The NFO will have a base issue size of Rs 1,000 crore with an open greenshoe option.

The greenshoe option is expected to be around Rs 4,000 crore, thus taking the total amount to be mobilised through the ETF to Rs 5,000 crore.

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The AUM of Bharat Bond ETF, which is managed by Edelweiss Mutual Fund, stands at Rs 36,359 crore at the end of October 2021.

Bharat Bond ETF is an exchange-traded fund that invests in the debt of public sector companies. The ETF currently invests only in 'AAA' rated bonds of public sector companies.

The funds raised through the debt ETF helps in smoothening borrowing plans of the participating CPSEs or public sector banks. It also helps them in meeting their capital expenditure needs.

The second tranche of the Bharat Bond ETF, which was launched in July 2020, was oversubscribed more than 3 times, collecting about Rs 11,000 crore. It had fetched about Rs 12,400 crore in its debut offer in December 2019.

Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey said the organic increase in AUM of existing Bharat Bond ETFs in the last two years resembles investors' confidence in the product and we are very happy with its overall impact on the market.