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Reliance Nippon Life Asset Management Company (RNAM) has decided to side-pocket its investment exposure in Reliance Capital following a rating downgrade by CARE Rating on September 20.
Delay in coupon payments
Initially, Reliance Capital had delayed coupon payments of certain non-convertible debentures on September 9 by one working day and paid the same on September 11. This constitutes an event of default according to CARE Ratings default recognition policy.
Subsequently, the rating agency downgraded the long-term rating of Reliance Capital to “D” (below investment grade) on September 20.
“We are recognising the development as a credit event as on September 23. Reliance Nippon Life Asset Management has already sent individual written communication to enable provision of segregated portfolio in Reliance Equity Hybrid Fund and Reliance Equity Savings Fund with immediate effect,” said the fund house in a statement on Monday.
Investors have been provided 30 days load-free exit from September 25.
All ongoing subscriptions in the schemes had been suspended from Monday till further notice.
All existing investors in the schemes as on the day of the creation of segregated portfolio will be allotted an equal number of units in the segregated portfolio as held in the main portfolio.
No redemption and subscription will be allowed in the segregated portfolio. However, in order to facilitate exit to unitholders in the segregated portfolio, the AMC will enable listing of units of the segregated portfolio on recognised stock exchanges within 10 working days of creation of segregated portfolio and also enable transfer of such units on receipt of transfer requests.
Upon recovery of any money from the segregated portfolio, it will be immediately distributed to the investors in proportion to their holding in the segregated portfolio. Reliance Nippon Life AMC will disclose separate NAVs of segregated and main portfolios from the date of creation of segregated portfolio.
Both the schemes had an investment of ₹130 crore.
Also read:RCap plans to exit MF biz; asks partner Nippon to buy it out in JV
Related news:Nippon Life hikes stake in Reliance Nippon AMC to 54 per cent via open offer
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