Govt to retain over-subscription in both offerings of Bharat Bond ETF

Both three-year and ten-year series received bids in excess of the base issue size

The government has decided to exercise the green-shoe option and retain the excess subscription received in both the three-year and ten-year series of the Bharat Bond ETF.

The three-year category received applications for units worth Rs 6,982 crore, an over-subscription of 2.3 times against issue size of Rs 3,000 crore. The ten-year category received Rs 5,413 crore, or 1.4 times the issue size of Rs 4,000 crore.

With approximately 55,000 applications received, the new fund offering saw robust retail participation with strong support from digital channels.

The ETF opened on December 12. On the first day, institutional investors participated to build the anchor book.

According to market sources, public and private sector banks, along with insurers, including Life Insurance Corporation of India had participated in the anchor book of the ETF.

To allow access to investors without demat accounts, the ETF was also offered through a fund-of-fund structure by Edelweiss AMC.

Further, sources say the ETF had had strong participation from non-resident investors, high-net worth investors, top-tier corporates and foreign institutional investors. 

With the management fee pegged at a paltry 0.0005 percentage of the investor assets, there were question marks on how the distribution costs would get absorbed. Edelweiss AMC tapped digital platforms of Paytm Money, HDFC Securities, Zerodha and ICICI Securities for distribution of the ETF, besides other channels.

According to officials, depending upon the success of the product, government may even consider making AA-rated PSU bonds part of the ETF. “For now, AAA-rated bonds have been included so that retail investors can repose their faith in the product,” a source said.