Bharat Bond ETF tranche II collects Rs 10,992 cr; oversubscriptions to be retained

Issue oversubscribed by more than 3.7 times against the base issue size of Rs 3,000 crore; Approximately 40,000 applications were received

Kumar Shankar Roy Jul 21, 2020

Bharat Bond ETFsEdelweiss Asset Management has announced that the Bharat Bond NFO Tranche II has received applications amounting to Rs 10,992 crore from around 40,000 applications. However, the Rs 10,992-crore amount falls short of the Rs 14,000 crore it had targeted at the upper range.

The Bharat Bond ETF programme is an initiative of the Government of India, from the Department of Investment and Public Asset Management (DIPAM). The latter has given the mandate to Edelweiss AMC to design and manage the product. The tranche II NFO (New Fund Offer) started on 14th July 2020 and ended on 17th July 2020. The Bharat Bond tranche I was launched in December 2019.

According to a statement, the initial NFO issue size for tranche II at Rs 15,000 crore (base issue size of Rs 3,000 crore with a greenshoe option of Rs 12,000 crore) was oversubscribed by over 3.7 times. The 2025 maturity date category received applications for Rs 4,531 crore, an oversubscription of 2.3 times. The 2031 maturity category received applications for Rs 6,461 crores an oversubscription of 6.5 times. All the oversubscriptions will be retained in both categories.

With approximately 40,000 applications received and considering Covid-19 restrictions on accepting physical applications, Edelweiss Mutual Fund’s Bharat Bond NFO witnessed wide retail participation with strong support from digital channels, the company said.

The ETF will invest in constituents of the NIFTY BHARAT Bond Indices, consisting of AAA-rated public sector companies. BHARAT Bond Fund of Funds (FOF) with similar maturities were also launched for investors, who did not have demat accounts.

Tuhin Kanta Pandey, Secretary DIPAM, Ministry of Finance, said, “The overwhelming response and over-subscription of the BHARAT Bond ETF tranche II issue shows that the product is well accepted and there is enough demand from investors for CPSE Bonds. The wide participation from investors during the current environment is very encouraging. This has helped the participating CPSEs in raising long term resources that will aid their capex plans in the current financial year.”

Pandey had earlier stated that the government expected to raise between Rs 3,000 crore to Rs 14,000 crore from Bharat Bond tranche II.

Radhika Gupta, MD & CEO, Edelweiss Mutual Fund said, “We are very happy with the strong raise BHARAT Bond ETF NFO has seen, more importantly, wide participation from various sets of investors despite challenging times. This gives us the confidence to keep building the BHARAT Bond ETF programme and launch more ETFs in the coming time with various maturities across the yield curve. The BHARAT Bond ETF programme now manages a significant amount across four ETFs launched in the last six months.”


Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at kumarsroy@rupeeiq.com.

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