ICICI Prudential Asset Management Company, India’s largest asset manager, sees volatile oil prices as a risk for returns from the second tranche of government’s exchange-traded fund that tracks performance of 22 state-run companies.
Bharat 22 ETF includes state-owned oil firms such as Oil & Natural Gas Corporation Ltd., Indian Oil Corporation Ltd. and Bharat Petroleum Corporation Ltd. The three companies together have a weight of 13.83 percent in the fund.
Crude oil recently touched $80 a barrel, the highest in four years. “If oil shoots up to $100 a barrel, it will have a negative impact on the Bharat-22 ETF,” S Naren, chief investment officer of the company that manages assets worth Rs 3 lakh crore, told BloombergQuint in an interview.
ICICI Prudential Mutual Fund is managing the follow-on offer of the Bharat-22 ETF, through which the government aims to collect about Rs 8,400 crore. The fund was created in 2014 to help the government meet its divestment target.
The finance ministry launched the second tranche on June 19. The issue opened for anchor investors the same day and for other institutional and retail investors a day later. The offer closes on June 22. The anchor portion for the fund received bids worth Rs 5,163 crore against the issue size of Rs 1,500 crore.
Watch the full interview here: