Two Franklin Templeton debt funds turn cash positive on fresh flow

Suresh P Iyengar Suresh P Iyengar Mumbai | Updated on July 02, 2020

Schemes get ₹1,218 cr from Nirma arm, Tata group, others

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 investment and redemption in the six debt schemes in April due to unprecedented redemption pressure.

The UltraShort Bond Fund and the Short Term Income Fund have turned cash positive, following the cash inflow. The UltraShort Bond Fund received ₹1,039 crore from Nuvoco Vistas Corp, owned by Ahmedabad-headquartered Nirma, which produces FMCG products and cement.

It also got ₹397 crore from Hero Wind and Solar Energy Co by exercising put option while Incred Financial Service repaid ₹170 crore. An amount of ₹84 crore was received from the Tata Group companies. The UltraShort Bond Fund has overall asset under management of ₹9,772 crore. This apart, Short Term Income and Low Duration funds received ₹52 crore and ₹86 crore last month, respectively. Credit Risk, Dynamic Accrual and Income Opportuntiy funds received ₹30 crore, ₹8 crore and ₹3 crore, respectively.

The Low Duration and Short Term funds manage assets worth ₹2,389 crore and ₹5,406 crore respectively. Similarly, the Income Opportunities and Credit Risk funds have assets of ₹1,710 crore and ₹3,399 crore. The assets in Dynamic Accrual stand at ₹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 had 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 continue to receive returns, two of its investments in Essel Infraprojects and Reliance Big Entertainment had defaulted on principal and interest payment. Four of the six debt schemes had investments in Essel Infraprojects which matured in May while Reliance Big Entertainment defaulted on interest payment obligation in June.

Published on July 02, 2020

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