No plan to exit India, Franklin Templeton Chief tells investors

Statement follows reports that FT global head wrote to Indian ambassador that the asset manager would be forced to cut jobs and pull back India operations in case Sebi levies a large fine

US-headquartered asset manager Franklin Templeton has said it has no plan to exit its India operations.

In a letter to investors by Sanjay Sapre, President, Franklin Templeton Mutual Fund said “I wish to clarify and re-iterate that Franklin Templeton’s commitment to India remains steadfast. We were early entrants in the Indian mutual fund industry and have remained a part of the industry even while many other global asset managers decided to leave. Please let me assure you, we have no plans to exit our India business. Any speculation suggesting otherwise, or any rumours around sale of our business in India are incorrect and simply that - rumours.”

The statement follows news reports that the Franklin’s global head Jennifer Johnson had written a note to the Indian ambassador in Washington stating that the asset manager would be forced to cut jobs and pull back its India operations in case the market regulator Sebi levies a large fine or issues disgorgement order in the case pertaining to winding up of its six debt schemes.

“Our engagement with government authorities, in India and globally, is also something we, and many companies do, as a matter of course. We have endeavored to keep all stakeholders, including the relevant government and diplomatic authorities, appropriately informed of developments, and will continue to do so. Our intention in reaching out remains bringing the current matters to an appropriate and satisfactory conclusion,” Sapre added.

Sebi has issued show cause notices to the fund house and its officials for redeeming their investments weeks before the closure announcement. Franklin has submitted detailed responses to Sebi’s notices.

“We have great respect and full confidence in Sebi and all regulatory authorities. Please be assured that we have been fully transparent with the regulator and have extended our fullest cooperation to them, to help them examine the circumstances surrounding the winding up of the six schemes by Franklin Templeton last year,” Sapre said.

The asset manager on Friday also said that all the six schemes under winding up are now cash positive and they have received total cash flows of Rs 15,776 crore till March 31, 2021. The flows have been from maturities, coupons, sale and prepayments since winding up.

Cash available for distribution in all schemes now stands at Rs 1,874 crore post distribution of Rs 9,122 crore in February 2021. Over the latest fortnight, the six schemes received cash flows of Rs 505 crore. The net asset value (NAV) of all the six schemes were higher than their respective NAVs on April 23, 2020, when the fund house announced the decision to wind up.

Franklin manages assets worth over Rs 60,000 crore of 2 million investors in the country. India accounts for about a quarter of its global workforce.

“India is not just an attractive investment destination, but a country that has contributed greatly to our success,” Sapre said.

Over the past decade, several foreign fund houses have exited India even as assets have growth at healthy pace. Morgan Stanley, ING, PineBridge and Daiwa are some players to have exited domestic operations since 2013.