Bharat Bond ETF: Second tranche aims to raise Rs14,000 crore

Edelweiss AMC has been given the mandate to design and manage the product.

Edelweiss Asset Management on Friday launched the second tranche of Bharat Bond ETF with two new series, aiming to raise Rs 14,000 crore. The new series will have maturities of April 2025 and April 2031 and will invest in constituents of the Nifty Bharat Bond Indices, consisting of AAA-rated public sector companies.

The Bharat Bond ETF programme is an initiative of the government of India, from the Department of Investment and Public Asset Management. Edelweiss AMC has been given the mandate to design and manage the product.

The new fund offer (NFO) will start from July 14 and end on July 17. “Through the launch of these two new ETF series, Edelweiss Mutual Fund proposes to raise an initial amount of Rs 2,000 crore with a green shoe option of Rs 6,000 crore in 2025 maturity, and an initial amount of Rs 1,000 crore with a green shoe option of Rs 5,000 crore in 2031 maturity based on market demand,” Edelweiss said in a statement.

Bharat Bond Fund of Funds (FOF) with similar maturities will also be launched for investors, who do not have demat accounts, it added.

Rashesh Shah, chairman and CEO, Edelweiss group, said the first launch of Bharat Bond ETF was highly successful and since then it has seen healthy growth in assets under management (AUM) and good liquidity on exchange.

“The corpus of Bharat Bond first tranche has grown to about Rs 14,000 crore. More importantly, the average trading volume has been very good. We have seen a trading of Rs 2.5-3.5 crore everyday, which for a retail investor provides adequate liquidity. They can enter and exit fairly easily,’ Shah said.

Twenty five percent of the issue size has been reserved for retail investors while 75% has been reserved for retirement funds, qualified institutional buyers and non-institutional investors.

Radhika Gupta, CEO, Edelweiss Mutual Fund, said there is a healthy demand from investors for these ETFs in the current environment where safety is paramount.

“In future, we do expect to launch more ETFs and fill the remaining maturities. Given the positive response to the long maturity 2030 series that we launched, I hope that we will also be able to launch longer maturity bond funds later. Given the success of the first issue and the way market reacted to it, the product contours for this launch remain largely the same as the first series. We will continue to invest in highest-rated securities,’ Gupta said.