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Bharat-22 ETF receives bids worth Rs 15,436 crore

Published on June 27, 2018
The second tranche of the Bharat-22 Exchange Traded Fund (ETF) received bids worth Rs15,436 crore, much higher than the government's fund raising target.
  • Bharat-22 ETF comprises shares of 22 companies.
  • The second tranch of the ETF was targeted to achieve a fund mop up of Rs 6,000 crore with a green-shoe option for another 2,400 crore.
  • The bidding for the ETF ended on June 22, 2018.
  • According to ICICI Prudential Mutual Fund, which is managing the follow-on fund offer (FFO), total bids of 1.2 lakh have been made.
  • It must be noted that the government is likely to exercise the green-shoe option to retain the additional Rs 2,400 crore worth bids received.

What is Bharat-22 ETF?

Bharat 22 is a well-diversified ETF spanning six sectors:
  • Basic Materials
  • Energy
  • Finance
  • Industrials
  • FMCG
  • Utilities

The sector wise weightage in the Bharat 22 Index is:

  • Industrials (22.6%)
  • Finance (20.3%)
  • Utilities (20%)
  • Energy (17.5%)
  • FMCG (15.2%)
  • Basic Materials (4.4%)
It was launched by The Union Government to meet some part of its disinvestment target of Rs. 80,000 crore in current fiscal.
The finance segment includes stocks from State Bank of India (SBI), Axis Bank, Bank of Baroda (BoB), Indian Bank, Rural Electrification Corporation and Power Finance Corporation.
The energy segment includes Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC), Bharat Petroleum (BP), and Coal India.

Exchange Traded Funds (ETFs)

  • ETFs are essentially index funds that are listed and traded on exchanges like stocks.
  • They are basically basket of stocks with assigned weights that reflects the composition of an index.
  • They are similar to mutual funds in a certain manner but are more liquid as they can be sold quickly on stock exchanges like shares.
  • The ETFs trading value is based on the net asset value of the underlying stocks that it represents.
  • Their price changes daily as they are traded throughout day.
  • ETF route is considered as safer mode of disinvestment as it shields investors against stock market volatility.

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