Edelweiss Asset Management on Friday said that it will launch the second tranche of BHARAT Bond ETF on July 14 with two new series, after the successful launch of the initial series of ETFs in December 2019 and plans to raise up to Rs 14,000 crore.
The BHARAT Bond Exchange Traded Fund (ETF) program is an initiative of the Government of India, from the Department of Investment and Public Asset Management and the latterhas given the mandate to Edelweiss AMC to design and manage the product.
The two new Bharat Bond ETF series will have maturities of April 2025 and April 2031.
New Fund Offer (NFO) will start from July 14 and end on July 17, 2020. Through the launch of these two new ETF series, Edelweiss Mutual Fund proposes to raise an initial amount of Rs 2,000 crores with a green shoe option of Rs 6,000 crores in 2025 Maturity and initial amount of Rs 1,000 crores with a green shoe option of Rs 5,000 crores in 2031 Maturity based on market demand.
The ETF will invest in constituents of the NIFTY BHARAT Bond Indices, consisting of AAA rated public sector companies, an Edelweiss statement said. BHARAT Bond Fund of Funds (FOF) with similar maturities willalso be launched for investors, who do not have demat accounts, it added.
Rashesh Shah, Chairman & CEO, Edelweiss group said: "The first launch of BHARAT Bond ETF was highly successful and since then it has seen healthy growth in AUM and good liquidity on exchange. We hope that the BHARAT Bond ETF program achieves its ultimate objective of creating a liquidyield curve for CPSE bonds and helps further the agenda of development of bond markets."
Speaking during a webinar for the announcement Tuhin Kanta Pandey, Secretary, DIPAM, Ministry of Finance said: "BHARAT Bond ETF program has achieved some important objectives that were envisioned while creating the blueprint of this program. It has provided aggregate savings in borrowing cost for participating CPSEs/CPSUs/CPFIs."
He added that the organic increase in assets under management (AUM) of existing BHARAT Bond ETFs even during these uncertain times resembles investors building confidence with the product.
"In upcoming issue, we expect to raise anywhere between Rs 3,000 crore to Rs 14,000 crore. This will help CPSEs in their capex programs in coming months," Pandey said.