Bharat-22 ETF tranche 2 opens

New Delhi: The second tranche of the Bharat 22 Exchange Traded Fund (ETF) announced last year as part of the government`s disinvestment programme opened for investors on Tuesday and will end on Friday.

With the initial issue size of Rs 6,000 crore, the ETF will open for anchor investors on Tuesday and for other institutional and retail investors from Wednesday to Friday.

There is also a green shoe option of Rs 2,400 crore, subject to government approval, which is a special provision where the bid issuer allows for oversubscription to the issue up to a certain limit.

An ETF is a traded security that tracks an underlying asset like a group of companies or commodity. The government earlier approved the alternative mechanism through the ETF route to divest its stake in central public sector undertakings (CPSEs).

Designed to bring broad-based ownership pattern to public sector enterprises, the Bharat 22 ETF comprises 22 companies, or investments, from among CPSEs and public sector banks (PSBs).

The ETF is well diversified with investments across six core sectors, including industrials, finance, utilities, energy, fast moving consumer goods and basic materials.

No sector crosses the 20 percent sectoral capping and there is a stock capping of 15 percent.

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).

While the National Aluminium Co (Nalco) is the only firm in the basic materials category in the Bharat 22 ETF, the energy sector includes 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 14,500 crore through the CPSE ETF route in the 2017-18 fiscal.