PGIM India (formerly DHFL Pramerica Mutual Fund) has recovered its entire exposure to Anil Ambani Group owned companies ahead of its maturity on October 10.
The entire exposure was ring fenced and secured against shares of Reliance Nippon Asset Management.
Anil Dhirubhai Ambani Group sold its majority share in Reliance Nippon Asset Management Company to its joint venture partner Japan's Nippon Life Asset Management Company which has raised its stake to 75 per cent in the Reliance Mutual Fund for Rs 7,800 crore.
Some of the fixed income schemes of PGIM invested in Reliance ADAG group companies, were downgraded to default grade by rating agency Crisil mid-September. This had triggered 50 per cent mandatory cut in the valuation of these investments leading to sharp fall in net asset value of these schemes.
On Saturday, PGIM India said it had fully recovered all the invested amount from the Reliance ADAG group ahead of the scheduled maturity of October 10. The recovery of money has been accounted for in the NAV of the impacted schemes leading to recovery and restoration of the NAV in all the schemes that held this exposure.
"With this recovery, we have no further exposure to any Reliance ADAG Group," it said.
Ajit Menon, CEO, PGIM India said the collateral and payment mechanism put in place by the fund house with regard to the investments in these bonds ensured that the investors did not lose any money.
Mid-September rating agency downgraded Anil Ambani group firm Reliance Business Broadcast News Holdings, which owned Business Broadcast News and Reliance Commercial Finance, leading to a steep drop in the net asset values (NAVs) of mutual fund schemes with concentrated exposure to its debt papers.
Two of PGIM India’s funds witnessed 21-30 per cent drop in NAVs, following the downgrade. As of August-end, 23 schemes had Rs 583 crore of exposure to RBBNH’s debt papers. The overall exposure to ADAG Group was reduced to Rs 149 crore progressively.
The asset size of these schemes had shrunk significantly due to a sharp outflow after the liquidity crisis triggered by the IL&FS defaults leaving these schemes with concentrated exposure to relatively illiquid assets.