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Edelweiss AMC to Launch Second Tranche of ‘BHARAT Bond ETF’ ; Target to Raise Rs 14000 crore

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Edelweiss MF to launch 2nd tranche of Bharat Bond ETFOn July 03, 2020, Edelweiss Asset Management Company (AMC), a subsidiary of Edelweiss Capital Limited (ECL) has decided to bring the second installment of the Bharat Bond ETF (Exchange Traded Fund) with two new series to raise Rs 14,000 crore in July 2020.

The second batch is due to be launched on 14 July 2020 & the consignment will close on 17 July 2020. It will invest only in AAA-rated bonds of Public Sector companies.

Consignment breakup:

Through the launch of these two new ETF series, which have maturities of 5 years and 11 years, Edelweiss aims to raise an initial amount of Rs. 2,000 crores from institutional players with a greenshoe option of Rs. 6,000 crores 5-year maturity period (April 2025) and initial amount of Rs. 1,000 crores with a green shoe option of Rs. 5,000 crores in 11 years (April 2031).

The new five-year and 11-year ETFs track have yields of 5.65% and 6.76%, respectively, as on 1 July.

Who invest how much?
  – Small retail investors will have to invest at least Rs 1,001 in this fund and in multiples of Re 1 thereafter. Here they can invest up to 2 lakhs. While non-institutional investors, retirement funds and QIBs, it is to an extent of Rs 2 lakh and in multiples of Re 1 thereafter.
  – At the same time, the minimum amount for anchor investors has been fixed at Rs 25 crore and in multiples of Re 1 thereafter.

Initial Series:

Earlier in December 2019, the successful opening series of ETF with fixed maturity period of 3-years (2023) & 10-years (2030) was introduced through which, Rs 12,400 crore was raised.

Why was Bond issued?

Generally, governments issue bonds to meet the fiscal deficit & it has put this option in front of investors to raise money for Public Sector Undertaking (PSUs). Earlier governments used to launch bonds only for big investors but now small investors can also join.

Bharat Bond ETF:

It is a kind of mutual fund, which will invest only in bonds issued by government companies.The bond will be listed on the stock exchange, and tradable on exchanges. The funds that will come from investing in this bond will be invested in companies included in this bond index. In such a situation, it is expected to get better returns. It will track the Nifty Bharat bond Target Maturity Indices. BHARAT Bond Funds of Funds (FOF) is also being launched for investors who do not have Demat accounts.

This ETF is an initiative of Department of Investment and Public Asset Management DIPAM),Government of India (GoI), and then it mandates Edelweiss AMC to design and manage the product.

About Edelweiss Capital Limited:
Headquarters– Mumbai, Maharashtra
Chairman & CEO, Edelweiss Group– Rashesh Shah
Founded– 1995
Edelweiss AMC acts as the Investment Manager to Edelweiss Mutual Fund.
Edelweiss Mutual Fund CEO– Radhika Gupta