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There is some good news for debt investors of mutual funds. Vodafone Idea has paid the annual interest on the debt raised, which will now be distributed among investors.
In February, most mutual funds, including Franklin Templeton Mutual Fund, Nippon India Asset Management Company and UTI Mutual Fund, had side-pocketed the investment and investors were issued units in segregated accounts.
Six schemes of Franklin Templeton will distribute ₹103 crore, while Nippon India Hybrid Bond Fund has received ₹9.31 crore. UTI Mutual Fund had received ₹13.5 crore.
Nippon India, in a statement, said the part-payment will be credited in investors’ accounts in three days and they are confident of receiving the full payment.
The payout shall be processed by extinguishing proportionate units in the plans of the segregated portfolio of the respective schemes. After the payment, the number of units outstanding in the investor’s segregated account would fall to the extent of payout.
Exposure to Vodafone
As of February, debt mutual funds had a combined exposure of ₹3,390 crore to Vodafone Idea.
The Supreme Court had directed Vodafone Idea to deposit a combined $13 billion in past dues for spectrum and licences in a month and rejected plea for extended payment. Vodafone Idea, which owes the government the most among its peers, said its ability to continue as a going concern depends on whether the apex court modifies a previous order that had set January 24 as the deadline for payment.
Following this, Care Ratings cut Vodafone Idea’s bonds and loans to BB- from BBB- Monday, citing a sharp erosion in the overall risk profile of the company after the Supreme Court offered no relief for its fee payment.
UTI and Nippon India Mutual Fund side-pocketed their exposure in Vodafone Idea on February after Care Ratings downgrade, while Franklin Templeton did it in six of its debt schemes when Crisil downgraded in January.
Incidentally, Franklin Templeton is in the process of winding up the six debt schemes, which has been stayed by the Gujarat High Court.
However, an analyst said distribution of fund received from Vodafone Idea in the segregated portfolio will not be affected by the Court's stay order.
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