'Launch date, issue quantum of Bharat-22 ETF finalised'

The government on Monday finalised the launch date and the issuance quantum of the Bharat 22 Exchange Traded Fund (ETF) announced earlier this year, official sources said here.

The sources said that an inter-ministerial committee headed by Finance Minister Arun Jaitley gave its approval to the ETF's tranche size and launch date proposed by the Department of Investment and Public Asset Management (DIPAM).

The Bharat 22 ETF comprising 22 companies, or investments, from among central public sector enterprises (CPSEs) and public sector banks (PSBs). is likely to be launched next month, the sources added without giving more details.

Petroleum Minister Dharmendra Pradhan, Urban Development Minister Hardeep Singh Puri, Railway Minister Piyush Goyal and Power Minister R.K. Singh are among the members of the committee.

Apart from CPSEs and PSBs, Bharat 22 also includes the government's strategic holding in Axis Bank, ITC and L&T held through the Specified Undertaking of Unit Trust of India (SUUTI).

The ETF is a well diversified portfolio of six sectors, which are basic materials, energy, financial, fast moving consumer goods (FMCG), industrial and utilities. No sector crosses the 20 per cent sectoral capping and there is a stock capping of 15 per cent.

The Bharat 22 Index will be rebalanced annually. ICICI Prudential Asset Management Company (AMC) will be the ETF Manager and Asia Index Private Limited will be the Index Provider.

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.

The alternate mechanism will be used to take decisions for divestment through ETF for all listed CPSEs, subject to the government retaining a 51 per cent stake in them.

While the National Aluminium Co (NALCO) is the only firm in the basic materials category in the Bharat 22 ETF, the energy sector includes the giants ONGC, Indian Oil, BPCL and Coal India.

The finance sector companies include the State Bank of India and Axis Bank, where the government holds some stake, while the only firm included in the FMCG sector is ITC.

The government had raised Rs 8,500 crore through the CPSE ETF route in the last fiscal.

In his budget speech of 2017-18, Jaitley had promised to use ETF as a vehicle for further disinvestment of shares. The Centre has a disinvestment target of Rs 72,500 crore for the current fiscal, of which Rs 46,500 crore is planned to be raised through disinvestment, while Rs 15,000 crore is the target in the case of strategic disinvestment that involves surrender of government's majority control of the company.

--IANS

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