You are here: Home » Markets » News
Business Standard

Franklin Templeton urges investors to vote for winding up of 6 schemes

The Supreme Court had directed Franklin Templeton Mutual Fund to seek consent of the unit-holders for winding up six debt schemes.

Topics
Franklin Templeton | Supreme Court | Mutual Funds

IANS  |  Delhi 

Franklin Templeton MF
Franklin Templeton MF

As the has directed Mutual Fund to seek consent of the unit-holders for winding up the six schemes, the mutual fund house urged the investors to vote in favour of the closure, suggesting that it would result in the "best possible outcome" for them.

In a letter to the investors, ranklin Templeton Asset Management (India) Pvt. Ltd President Sanjay Sapre said that the company will issue notice for seeking consent of unit-holders shortly and consent will be sought from the unit-holders for each scheme separately.

"We seek your consent for the orderly winding-up and believe this will result in the best possible outcomes for unit-holders under the current circumstances. In normal market conditions, the opportunity to liquidate assets at fair value will increase with time," he said.

Sapre said that a vote of "yes" in favour of the orderly winding-up will allow the fund house to proceed with the next step which is seeking unit-holder authorisation under Regulation 41. Post this, the Trustee or any other authorised person can proceed with monetisation of assets and distribution of monies to unit-holders.

This will also mean that the schemes will not be required to make a distress sale of portfolio securities to fund redemptions, he said in the letter.

A vote of "no" against the orderly winding-up would mean the funds will be required to re-open for purchases and redemptions.

"The schemes may suffer significant losses due to the need to sell securities at distress prices to fund heightened redemption volumes," Sapre told the investors.

He noted that from April 24 to November 27, 2020, the schemes under winding up have received over Rs 11,576 crore from maturities, pre-payments, and coupons. Out of the Rs 11,576 crore, the schemes have received Rs 2,836 crore in the month of November 2020.

He said that four out of the six schemes are already cash positive.

"Even though the schemes could not actively monetise the portfolio, the cash available for disbursement as on November 27, 2020 stands at Rs 7,226 crore for these four schemes, subject to fund running expenses," he said.

"This shows that subject to unforeseen credit events, if any, the securities held in the funds can be liquidated at fair value, if the schemes are allowed to undertake an orderly process of liquidation."

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, December 04 2020. 16:52 IST
RECOMMENDED FOR YOU
.