Bharat-22 ETF follow-on offer could be worth Rs 100 bn: Finance Minnistry

Bharat-22 ETF follow-on offer may touch Rs 100 bn as govt looks to dilute stake in CIL

The Finance Ministry may come out with a Rs 100 billion follow-on fund offer of the Bharat-22 exchange-traded fund (ETF) as it looks to dilute stake in Coal India to meet the minimum public holding norm.

Besides, the ministry is keen to take the ETF route to sell off government shares held through Specified Undertaking of the Unit Trust of India (SUUTI) in private companies — ITC, Axis Bank and L&T, an official told PTI.

The government had in November last year launched Bharat-22 ETF comprising shares of 22 companies, including public sector undertakings (PSUs), public sector banks, ITC, Axis Bank and L&T.

The fund had garnered bids to the tune of Rs 320 billion, although the government retained only Rs 145 billion.

An official said the ETF route is a safer mode of disinvestment as it shields investors against stock market volatility.

"Based on the current composition of the Bharat-22 ETF, the leg room for a follow-on fund offer would be around Rs 100 billion," the official added.

The state-owned companies or PSUs that are part of the new Bharat ETF-22 include ONGC, IOC, SBI, BPCL, Coal India and Nalco.

The other central public sector enterprises on the list are 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.

The official said by using the ETF route, the government may dilute about 3.55 per cent stake held in Coal India to comply with the minimum 25 per cent public float requirement as mandated by market regulator Sebi.

The government plans to raise Rs 800 billion in the current fiscal from disinvestment, lower than over Rs 1 trilllion raised last year.

Prior to the launch of Bharat-22 ETF which has a diversified portfolio, the government had floated the CPSE ETF comprising stocks of 10 bluechip PSUs — ONGC, Coal India, IOC, GAIL (India), Oil India, PFC, Bharat Electronics, REC, Engineers India and Container Corporation of India.

Through the CPSE ETF, the government had raised Rs 115 billion in three tranches, with Rs 30 billion from the first tranche in March 2014, Rs 60 billion from the second tranche in January 2017 and Rs 25 billion from the third tranche in March 2017.