SBI Mutual Fund is planning to convert its Magnum Multiplier Scheme (MMS) 90 into an open-ended one.
The move, if approved by the Securities and Exchange Board of India (Sebi), will be the second instance where SBI Mutual is seeking to such a conversion.
The date of redemption for MMS 90 was December 1997. The scheme had collected around Rs 212.45 crore during its initial offer period in 1990. Its current assets stand at around Rs 170 crore.
The Board of Trustees of the fund are expected to meet shortly to discuss this conversion, senior SBI Mutual Fund officials told Business Standard.
The current net asset value of the scheme as on March 14 is Rs 12.54.
The other scheme which SBI Mutual plans to convert into an open-ended one is Magnum Multiplier Plus (MMPS) 93 which was launched on February 14, 1993 and commenced investing since December 1993.
Since March 1, 1996 the fund started repurchasing units at net asset value (NAV), according to the terms of the scheme, following which the initial corpus of the fund dwindled from Rs 967 crore to the current figure of Rs 596 crore.
The latest NAV for the scheme as on March 28 stands at Rs 12.81. It has around 13 lakh investors, around 50-60 per cent of whom belong to the category of small investors not holding more than one lakh units.
Initially, SBI Mutual Fund planned to issue rights to the unitholders of the Magnum Multiplier Plus scheme as per the terms mentioned in the offer document, following the lifting of the ban on mutual funds over the issue of rights by Sebi.
However, the board of directors of SBI Mutual Fund had subsequently decided to convert the scheme into an open-ended one.
A chartered accountant and other executives have been hired by the fund to carry-out the accounting part of the postal ballot.
This, however, is a very costly process and the fund has already spent in excess of Rs 80 lakh for this purpose, a senior official commented.
One effective way of reducing this cost, according to the official, is to send letters to each of the shareholders seeking their consent.
If they respond positively, the scheme will be converted into an open-ended one, and if they do not, it would be assumed that they would prefer the exit route and were against the conversion.
SBI Mutual is also planning to approach the Securities and Exchange Board of India in this regard.
