After Kotak MF-Essel saga, HDFC MF gives two options to FMP investors; check details

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Updated: April 16, 2019 4:40:57 PM

With the investors getting jittery over Subhash Chandra’s Essel group debt crisis, HDFC Mutual Fund has given two options to its investors for the fixed maturity plans or FMP getting matured before 30 September 2019.

HDFC MF gives two options to its investors in view of Essel crisis

With the investors getting jittery over Subhash Chandra’s Essel group debt crisis, HDFC Mutual Fund has given two options to its investors for the fixed maturity plans or FMP getting matured before 30 September 2019.

The first option for the investors is to get their FMPs rolled over or get them reimbursed at the current net asset value, while the second option is to get the fund ex-value of debt exposures to Essel group.

Last week, both Kotak Mahindra AMC and HDFC MF had sought more time from the investors for the redemption of the funds under their various FMPs. While the former has already informed the investors about its inability to repay the whole amount impending for maturity, the latter has also rolled over one of its schemes by 380 days.

The investors will not get full money under the six FMPs of Kotak Mahindra AMC maturing between 8 April and 31 May due to delay in repayment in two Essel group companies. The six Kotak FMPs have assets of Rs 2,094 crore, of which Rs 357 crore relates to Zee/Essel group companies.

Notably, in January, the lenders and mutual funds having exposure in the Essel Group to the tune of Rs 13,000 crore, had given the debt-ridden group time till 30 September to complete the stake sale in Zee Entertainment Enterprises. However, there has been no notable progress so far on the proposed stake sale, despite a few big names having expressed their interest in the company.

According to media reports, big players like Reliance, Amazon and Apple have expressed their interest in buying stake in Zee after the media baron Subhash Chandra got ready to halve his stake to about 22%.

Meanwhile, the Essel Group in a recent statement had reaffirmed confidence in completing its commitment towards repayment of debt to all the lenders and complete the resolution by September. According to Morningstar, around 10 fund houses hold securities worth Rs 8,000 crore in the Zee or Essel group promoter entities in various schemes, as of 31 December 2018.

“The investors will have to wait till September so that the promoters sell their stake as this is the best thing to do in the current scenario. If they start selling the pledged shares, they won’t be able to recover any thing as the shares will start falling like any thing. There is a risk in corporate debt fund which has materialised this time and investors should not panic,” an analyst said to Financial Express Online requesting anonymity.

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