Skip to main content

Govt to launch Bharat 22 ETF today, seeks to raise Rs8,000 crore

Govt to launch Bharat 22 ETF today, seeks to raise Rs8,000 crore
The Bharat 22 ETF will open for anchor investors on Tuesday and for non-anchor investors on 15 November and close on 17 November
The government will launch the ‘Bharat 22’ exchange traded fund (ETF) managed by ICICI Prudential Mutual Fund, on Tuesday, targeting an initial amount of about Rs8,000 crore. The new fund offer will be open for subscription till 17 November and a discount of 3% is being offered to all categories of investors.
“While our initial issue size for Bharat 22 ETF is Rs8,000 crore, we can also consider going beyond looking at the response in the market,” said Anuradha Thakur, joint secretary, Department of Investment and Public Asset Management (DIPAM) in the ministry of finance.
The ETF is part of the government’s overall disinvestment programme, and mirrors the S&P BSE Bharat 22 Index, which comprises select companies from the CPSE (central public sector enterprises) universe, stakes held under the Specified Undertaking of the Unit Trust of India (SUUTI), and state-run banks.
“While 39% of the index is in private sector companies, 61% is in government companies, which all have been handpicked by us,” Nimesh Shah, managing director and chief executive officer, ICICI Prudential Asset Management Co. Ltd, said at the press conference. The expense ratio of this ETF stands at 0.0095%, Shah said.
The S&P BSE Bharat 22 Index has a diversified representation in six BSE sectors—industrials, finance, utilities, energy, fast-moving consumer goods and basic materials. The index follows a free float adjusted market cap weighing methodology, with weighting of each individual index constituent capped at 1,5%, while weighting of each BSE sector is capped at 20%.
These weight constraints are applied during the annual index rebalancing in March each year.Shah explained that if certain scrips rally and rise beyond these designated limits in March, the stocks will be sold and profits will be booked accordingly. “There is an element of active in this passive (investment),” said Shah.

The Mint, New Delhi, 14th November 2017

Comments

Popular posts from this blog

At 18%, GST Rate to be Less Taxing for Most Goods

About 70% of all goods and some consumer durables likely to cost less

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment.

Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council…

Firms with sales below Rs.50 crore out of ambit

The tax department has reiterated that the PoEM rules, which require foreign firms to pay taxes in India if the effective control is here, will not apply to companies withaturnover of Rs.50 crore or less inafinancial year. Last month, the tax department had come out with the longawaited Place of Effective Management (PoEM) rules, which require foreign companies in India and Indian firms with overseas subsidiaries to pay local taxes if their businesses are effectively controlled by Indians. Then the rules did not setathreshold above which they were to apply. However, the accompanying press release states that the rules will not apply to companies withaturnover of up to Rs.50 crore inayear. That created confusion whether the threshold will be adhered to. Inacircular to clarify things, the Central Board of Direct Taxes (CBDT) said the provision "shall not apply toacompany havingaturnover or gross receipts of ~50 crore or less inafinancial year".

PoEM rules essentially target shell …