Baroda BNP Paribas Mutual Fund has launched an energy opportunities fund. The new fund offer (NFO), Baroda BNP Paribas Energy Opportunities Fund will aim capitalising on growth opportunities in India’s energy sector.
The NFO will remain open for subscription from January 21, 2025, to February 4, 2025.
Baroda BNP Paribas new fund’s objective:
Baroda BNP Paribas Energy Opportunities Fund’s key objective is to help investors benefit from the expanding energy sector as India transitions to a developed economy.
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The fund will allocate at least 80% of its assets to equity instruments of companies engaged in traditional and new energy across market capitalisations.
India’s energy sector potential:
India’s GDP is projected to grow by 1.9 times over the next five years, with energy demand expected to rise by 1.7 times.
The energy theme comprises nearly one-third of the Nifty 500 index, spanning multiple sectors.
The Nifty Energy TRI demonstrates superior price-to-earnings and price-to-book ratios, higher dividend yields, and faster earnings growth than the broader market.
Baroda BNP Paribas Energy Opportunities Fund benchmark’s historical performance:
The new fund is benchmarked against Nifty Energy TRI, which has consistently outperformed the Nifty 500 TRI over 3, 5, 7, and 10-year periods (as of December 31, 2024).
Suresh Soni, CEO of Baroda BNP Paribas Asset Management India, said, “Energy is the key to prosperity. As India’s energy demand grows in line with its GDP, the Baroda BNP Paribas Energy Opportunities Fund is well-positioned to unlock profitable investment opportunities for investors.”
Baroda BNP Paribas Energy Opportunities Fund portfolio strategy:
The fund will focus on opportunities across the traditional energy chain (coal, crude oil, gas, nuclear) and new energy transitions (solar, wind, hydro, hydrogen, geothermal).
Indian energy demand will be driven by a doubling middle class, lifestyle changes, and government initiatives like:
Doubling the share of natural gas in the energy mix to 15% by 2030.
50 GW renewable energy capacity bids annually between FY24-28.
Significant expansion in solar and wind power capacities by 2031-32.
On the NFO launch, Sanjay Chawla, Chief Investment Officer – Equity and Fund Manager, said, “The fund is ideal for equity investors with a holding period of three years or more. India’s energy story is powered by structural changes and government focus on improving energy security.”
The energy sector has been among the key industries that has been witnessing several reforms and announcements for the last many years. Here are some of the initiatives worth mentioning:
The energy sector is bolstered by several central government initiatives, including: Production Linked Incentive (PLI) schemes for high-efficiency solar modules; National Solar Mission Rooftop Scheme; Viability Gap Funding for battery energy storage systems; and National Green Hydrogen Mission.
