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Bharat-22 ETF opens for anchor investors on Tuesday; Centre hopes to raise ₹8,000 crore through NFO

Our Bureau Mumbai | Updated on January 09, 2018 Published on November 13, 2017

Investors to get 3% discount; for retail investors, minimum investment is ₹5,000

ICICI Prudential on Monday announced the much-awaited launch of Bharat-22 open ended exchange-traded fund, which is a part of the Centre’s disinvestment program worth ₹72,500 crore for FY18.

The ETF, which plans to raise at least ₹8,000 crore, will track the S&P BSE Bharat-22 Index and will consist of 22 stocks of central public sector enterprises, public sector banks and some strategic holdings of SUUTI (Specified Undertaking of the Unit Trust of India).

These companies would benefit from government reforms and initiatives such as financial inclusion, digitisation, Make in India, Goods & Services Tax (GST) and infrastructure reforms and belong to six sectors like basic materials, energy, finance, fast-moving consumer goods (FMCG), industrials and utilities. The companies are National Aluminium Company, Oil and Natural Gas Corporation, Indian Oil Corporation, Bharat Petroleum Corporation, Coal India, State Bank of India, Axis Bank, Bank of Baroda, Rural Electrification Corporation, Power Finance Corporation, Indian Bank, ITC, Larsen and Toubro, Bharat Electronics, Engineers India, NBCC (India), Power Grid Corporation of India, NTPC, GAIL (India), NHPC, NLC India and SJVN.

Of total equity assets under management of ₹1.25 trillion, ICICI Prudential AMC’s investments in the above stocks is worth ₹25,000 crore, Nimesh Shah, Managing Director and Chief Executive Officer, of the fund said. About 39 per cent of the index will constitute private companies, and the rest PSUs.

Weights

These stocks will have a weightage based on free float market capitalisation with maximum weight to sector and stock of 20 per cent and 15 per cent, respectively, at the time of the annual rebalancing in March each year.

The underlying index of the Bharat-22 ETF has higher dividend yield, lower price-to-earnings ratio and price-to-book ratio compared to the S&P BSE Sensex and Nifty 50, which make investments attractive, given the current market conditions of high valuation and slow growth in earnings.

Bharat-22 ETF will be offered at a discount of 3 per cent to investors (on the reference market price of the index constituents) through a new fund offer (NFO) starting November 14 for anchor investors and November 15 for the rest: retail individual investors, retirement funds, qualified institutional buyers and non-institutional investors. On Monday, the S&P BSE Bharat-22 Index closed at 3,751.81, down 1.1 per cent.

The government has raised a total of ₹11,500 crore through the CPSE ETF (first launched in March 2014) comprising 10 PSUs, including the ones mentioned above.

Published on November 13, 2017
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