FT UltraShort Bond gets ₹1,218 crore

Suresh P Iyengar Mumbai | Updated on July 03, 2020

All the six debt schemes under suspension turn cash positive

The six suspended debt funds of Franklin Templeton India have received ₹1,218 crore in June from the investments made before these schemes ran into trouble.

The fund house had to suspend fresh investments and redemptions in the six debt schemes in April due to unprecedented redemption pressure. All the six schemes have turned cash positive with steady returns from their investments.

The major chunk of the inflow had come in to the UltraShort Bond Fund followed by the Short Term Income Fund. The UltraShort Bond Fund had received ₹1,039 crore from Nuvoco Vistas Corp owned by Ahmedabad-headquartered Nirma, which produces FMCG products and cement.

It has also received ₹397 crore from Hero Wind and Solar Energy Co by exercising the put option, while Incred Financial Service has repaid ₹170 crore, and Tata Group companies paid back ₹84 crore. The UltraShort Bond Fund has overall assets under management (AUM) of ₹9,772 crore.

This apart, Short Term Income and Low Duration funds received ₹52 crore and ₹86 crore last month. Credit Risk, Dynamic Accrual and Income Opportunity funds received ₹30 crore, ₹8 crore and ₹3 crore, respectively.

The Low Duration and Short Term funds have assets of ₹2,389 crore and ₹5,406 crore. Similarly, the Income Opportunities and Credit Risk funds have assets of ₹1,710 crore and ₹3,399 crore. Dynamic Accrual has assets worth ₹2,482 crore.

The funds received in the six schemes will be distributed to investors after the Karnataka High Court lifts the stay order of Gujarat High Court.

Franklin Templeton Asset Management is in the process of filing a fresh petition in the Karnataka High Court to conduct e-voting to seek investors’ approval for closing the debt schemes.

Last month, the Supreme Court dismissed a similar plea filed by the fund house and transferred all the cases filed by investors against winding up of the schemes to the Karnataka High Court with a deadline of three months.

While the fund continues to receive returns, two of its investments in Essel Infraprojects and Reliance Big Entertainment had defaulted on principal and interest payments.

Four of the six debt schemes had investments in Essel Infraprojects which matured in May, while Reliance Big Entertainment defaulted on the interest payment obligation in June.

Published on July 03, 2020

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