Govt to raise Rs 100 bn through follow-on offer of Bharat-22 ETF in Feb

The government is planning to raise about Rs 100 billion 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 50 billion, with a green-shoe option to retain an over-subscription of equal amount, taking the total issue size to Rs 100 billion," the official told PTI.

The government has so far raised Rs 229 billion through the Bharat-22 exchange traded fund (ETF). While Rs 145 billion was raised in November 2017, another Rs 84 billion 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 173 billion 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 800 billion, the government has so far raised Rs 340 billion by selling minority stake in CPSEs and ETFs.