HDFC MF provides liquidity to FMP investors; stock tanks 7%

The company has offered exits to investors of some fixed-maturity plans (FMPs) by transferring Rs 500 crore worth of their exposures to Essel group firms on to its own books.

Shares of HDFC Asset Management Company (AMC) slipped 7 per cent to Rs 1,802 on the BSE in the early morning deals on Tuesday after the company said it has offered exits to investors of some fixed-maturity plans (FMPs) by transferring Rs 500 crore worth of their exposures to Essel group firms on to its own books.

This liquidity arrangement would be applicable for FMPs that matured in April or will be maturing as long as the 'standstill' agreement with Essel group firms is in force.

The company said such liquidity arrangement is in the larger long term interest of the company and is being undertaken purely as a measure to provide liquidity to the relevant unit holders. CLICK TO READ FULL REPORT

“The Company has decided to provide a liquidity arrangement to certain fixed maturity plan schemes of HDFC mutual fund (FMP schemes), to deal with the illiquidity faced by such FMP schemes due to their exposure to the non-convertible debentures ("NCDs") issued by Edisons Infrapower & Multiventures Private Limited and Sprit Infrapower & Multiventures Private Limited, companies promoted by the Essel group,” HDFC AMC said in a regulatory filing.

Provision of such liquidity arrangement will entail acquisition by the company of NCDs issued by the Essel Group companies held by such FMP Schemes at the prevailing valuation as on respective maturity/purchase dates. The liquidity arrangement may involve an aggregate outlay not exceeding Rs 500 crore and will be put in place shortly, it added.

At 09:46 am, the stock of HDFC AMC was trading 5 per cent lower at Rs 1,842 on the BSE, as compared to a 0.14 per cent rise in the S&P BSE Sensex. A combined 509,967 shares changed hands on the counter on the BSE and NSE so far.