Bharat 22 ETF opens for subscription today: Five things to know


The Bharat-22 exchange traded fund (ETF), which is expected to fetch around Rs 8,000 crore for the government, opens for subscription today, a day after the issue was open for anchor investors. Public investors will get access to the fund till November 17. We take a look at the fund which is part of the government’s divestment programme.
This ETF comprises leading companies from the private sector having an exposure of 39 per cent to the fund while the rest are public sector firms.
The fund comprises leading blue-chips such as ITC (through SUUTI) with 15.2 percent weightage, State Bank of India with 8.6 percent weightage, and Axis Bank (through SUUTI) with 7.7 percent weightage. Bank of Baroda, Bharat Electronics, Bharat Petroleum Corp, Coal India, Engineers India, Gail India, Indian Bank, Indian Oil Corp, Larsen & Toubro, National Aluminium Co, NBCC (India), NHPC, NLC India, NTPC, Oil & Natural Gas Corp, Power Finance Corp, Power Grid Corp of India, Rural Electrification Corp and SJVN are the other constituents of the fund. The fund consists of stocks from six sectors such as capital goods, finance, oil & gas, power, FMCG and metal, metal products and mining.
A discount of 3 per cent has been offered to all categories of investors. ICICI Prudential Asset Management Company is the fund manager for the ETF.
“Bharat 22 ETF aims to bring broad-based ownership pattern to public sector enterprises. The disinvestment programme now forms the core of the government’s investment strategy,” Department of Investment and Public Asset Management (DIPAM) Joint Secretary Anuradha Thakur said. While the initial issue size for the ETF is Rs 8,000 crore, we can also consider going beyond looking at the response,” she added.
Bombay Stock Exchange launched S&P BSE Bharat 22 index on 10 August 2017. The fund had a combined market capitalisation of Rs 22.25 lakh crore, a P/E multiple of 19.72 and a dividend yield ratio of 2.24 as on 13 November 2017.
The Narendra Modi government has set a disinvestment target of Rs 72,500 crore for the current fiscal, of which Rs 46,500 crore is to be raised through disinvestment mode, while Rs 15,000 crore is the target in the case of strategic disinvestment that involves the surrender of government’s majority control of the company.
An ETF is a traded security that tracks an underlying asset like a group of companies or commodity. The government had earlier approved the alternative mechanism through the ETF route to divest its stake in CPSEs.
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