Escorts Mf Income Bond Closing Date Extended

The scheme, which was due for closure on October 16 has

been extended to October 30, 1996.

Escorts Mutual is also seeking Sebi's permission to extend the buyback date to 13 months after the commencement of the scheme.

According to the scheme, the investor can buyback a unit at the rate of Rs 11.60.

The buyback is possible only at the end of one year from the date of commencement of the scheme.

"The prime reason for seeking the extension is to allow investors to avail of the benefit of long-term capital gains," said Jayant Dang, managing director, Escorts Finance.

 

The earlier repurchase period was supposed to commence from October 16, 1997.

However, for unitholders to be eligible under long-term capital gains, especially those wishing to exit immediately after a year, they would have to stay in the scheme for 12 months after allotment.

Assuming that allotment takes place in a month, they will have to stay in the scheme till November 30, 1997. Dang said that the extension of last closing date is, despite having received commitments for an amount exceeding the minimum subscription of Rs 20 crore, required for close-ended schemes as per Sebi guidelines.

According to him, about 50 per cent of the minimum subscription has come from the retail segment, while the rest comes in as commitments from the wholesale segment which consist of corporates and high net worth individuals.

"I would prefer to wait till October 30, before firming up the wholesale commitments and till more retail money comes in, as the concern is that with the wholesale segment keen on the buyback facility, they would exit immediately after a year.

The wholesale subscriptions will be considered only after accommodating the wholesale subscriptions," Dang said.

Escorts had requested the Securities and Exchange Board to guarantee the net asset value for the first one year and in the case of a shortfall, it would be made good by the sponsor, Escorts Finance.

However, the markets regulator had asked them to wait until the MF 2000 recommendations are implemented, which anyway includes this feature.