UTI, Reliance MFs side pocket stressed Rs 200 cr investment in Altico Capital India

Our Bureau Mumbai | Updated on September 26, 2019 Published on September 13, 2019

CARE Ratings has downgraded the debt instruments of Altico Capital India to ‘B’

UTI Mutual Fund and Reliance Mutual Fund have used the side pocketing facility to segregated their stressed investment of Rs 200 crore each in troubled Altico Capital India.

As of September 12, UTI Credit Risk Fund had an exposure of ₹201.82 crore in the debt security of Altico Capital India, amounting to 5.85 per cent of the schemes’ assets under management.

Similarly, Reliance Asset Management Company through its Reliance Ultra Short Duration Fund had about Rs 200 crore exposure to Altico Capital.

To protect the interest of investors, Reliance AMC has proposed to suspend all ongoing subscriptions from September 14 till further notice.It has allowed investors to exit the scheme load free till  September 24.

CARE Ratings has downgraded the debt instruments of Altico Capital India to ‘B’ (below investment grade) following its failure to pay interest on its debt.

UTI Mutual Fund has proposed to create a segregated portfolio in respect of Altico Capital India in UTI Credit Risk Fund effective from September 13, subject to approval from the Board of Trustees, said the fund house in a statement on Friday.

On recovery of money from Altico Capital, it will be distributed to investors in the proportion to their holding in the segregated portfolio, it added.

Existing investors in the scheme, as on the day of creation of segregated portfolio, shall be allotted an equal number of units in the segregated portfolio as held in the main portfolio.

No subscription and redemption will be allowed in the segregated portfolio of the scheme.

Investors redeeming their units will get redemption proceeds based on the NAV of the main portfolio and will continue to hold the segregated portfolio units separately, it said.

From now on, investors subscribing to the scheme will be allotted units only in the main portfolio based on its NAV.

The AMC will enable listing of units of the segregated portfolio on the recognised stock exchanges within 10 working days of creation of segregated portfolio and enable transfer of such units on receipt of transfer requests.

The UTI Mutual Fund will disclose separate NAVs of segregated and main portfolios from the date of creation of the segregated portfolio.

A statement of account indicating the units held by the investors in the segregated portfolio along with the NAV of both segregated portfolio and the main portfolio will be sent to the investors in five working days of creation of the segregated portfolio, said the fund house.

Published on September 13, 2019
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