Government inches closer to divestment target

NEW DELHI: The government has moved a notch closer to achieving its disinvestment target through minority stake sales in state-run companies as it has garnered around Rs 14,500 crore through its latest offering –– the Bharat-22 Exchange Traded Fund (ETF).

“We will be touching around Rs 52,500 crore,” said Neeraj Gupta, secretary for disinvestment and public asset management (DIPAM), which includes the amount raised through the listing of insurance firms.

Of the Rs 72,500 crore disinvestment target set for the fiscal, Rs 15,000 crore was to be achieved through strategic sales.



The Bharat-22 ETF, which comprises shares of 22 firms, was oversubscribed four times and saw bids of nearly Rs 32,000 crore coming in, with foreign institutional investors (FII) putting in nearly one-third of the amount bid.

“We have decided to retain Rs 14,500 crore of the total subscription that has come in for Bharat-22 ETF,” said Gupta adding that this is the highest new fund offer (NFO) collection in the history of mutual funds in India.

“The overwhelming response demonstrates the belief of domestic and overseas investors in the growth story of India and reforms being undertaken across sectors captured in the index,” said Gupta. State-owned companies, or PSUs, that are part of the ETF included ONGC, IOC, SBI, BPCL, Coal India and Nalco.

The NFO saw 3.35 lakh applications and the portion reserved for retail investors was subscribed 1.45 times, retirement funds 1.50 times, and non institutional investors (NIIs) and qualified institutional buyer (QIBs) seven times.

Last week, the portion reserved for anchor investors was subscribed six times, amounting to Rs 12,000 crore. “We have decided to retain mostly for retail and pension funds,” said Gupta.

ICICI Prudential Mutual Fund managed Bharat-22 ETF’s NFO which had an initial issue size of Rs 8,000 crore. As much as 25% of the total issue size, or Rs 2,000 crore, was reserved for anchor investors who put in bids worth Rs 12,000 crore.

LIC, BoI, SBI Pension Fund, EPFO and HDFC Ergo Insurance are among those who have put in bids. Gupta said the process of strategic sales was on for all companies including HPCL-ONGC merger and stake sale in Air India.