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The government is set to launch a second exchange-traded fund (ETF) known as the Bharat-22 that will comprise stocks of 22 blue-chip public sector units, State-owned banks and some holdings in SUUTI ((Specified Undertaking of Unit Trust of India).
“It has a diversified portfolio comprising six sectors including basic materials, energy, finance, FMCG, industrials and utilities,” said Finance Minister Arun Jaitley on Friday, adding that it has a sectoral cap of 20 per cent and stock capping of 15 per cent.
Nine PSUs Shares of firms nine PSUs including Oil and Natural Gas Corporation (5.3 per cent stake), Coal India Ltd (3.3 per cent) , and Indian Oil (4.4 per cent) and four state-owned banks such as State Bank of India (8.6 per cent) will comprise the ETF. Besides, SUUTI holdings in Axis Bank (7.7 per cent), ITC (15.2 per cent) and Larsen and Toubro (17.1 per cent) will also be part of the fund.
The ETF will have different tranches, said Neeraj Kumar Gupta, Secretary, Department of Investment and Public Asset Management (DIPAM), adding that the government has not taken any decision on when to launch it.
“The first tranche will depend on the market conditions,” he said, adding that the government has not decided how much it will raise through the fund.
Nearly 90 per cent of the equities included in the ETF are also traded in futures. ICICI Prudential AMC is the fund manager for the ETF.
Since it is also an index, private sector firms will also be able to create similar funds, Gupta said.
The Finance Minister also expressed confidence that the Bharat -22 ETF will be successful. “While creating the ETF, we have also kept in mind reforms in each of the sectors. This will have a direct impact on the valuation of these shares,” he said.
The Centre hopes to raise ₹72,500 crore from disinvestment of PSUs this fiscal, of which ₹42,500 crore is envisaged from minority stake sales and ETFs. Till now, it has raised about ₹9,300 crore.
In 2016-17, proceeds from stake sale fetched ₹46,247 crore to the government of which ₹8,500 crore were from ETFs.
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