Franklin Templeton’s six wound up debt schemes recovery Rs 9,700 cr out of Rs 26,000 crore lost

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November 18, 2020 3:02 PM

The fund house said that four out of the six schemes that are already cash positive have close to Rs 5,952 crores available to return to unitholders, subject to fund running expenses.

According to CFMA, a larger number of investors have dragged Franklin Templeton in court demanding refund of their investments.The wound up scheme had an estimated AUM of Rs 26,000 crore back in April.

The six debt mutual fund scheme that Franklin Templeton India had shut in April this year received Rs 941 crore in a fortnight taking total cash received by the six schemes from maturities, prepayments and coupon payments to Rs 9,682 crore. Franklin Templeton has been regularly receiving funds for the schemes since their closure. Earlier, between October 16 and 29, the schemes received Rs 438 crore. The fund house said that four out of the six schemes that are already cash positive have close to Rs 5,952 crores available to return to unitholders, subject to fund running expenses.

The wound up scheme had an estimated AUM of Rs 26,000 crore back in April. Franklin Templeton said that the decision to shut the six mutual fund schemes was taken owing to the unprecedented redemption pressure while there was dearth of liquidity in the debt market. Out of the most recent inflows worth Rs 941 crore, Rs 814 crore were received as pre-payments. The said amount was received by the fund house between October 30 to November 13. 

The six shut schemes include Franklin India Ultra Short Bond Fund, Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund and Franklin India Credit Risk Fund. These now have 43 per cent, 27 per cent, 26 per cent and 8 per cent of their respective assets under management (AUM) in cash.

Currently, investors of the six schemes are taking the fund house on in a legal battle. The Karnataka High Court had on October 24 ordered Franklin Templeton to take the consent of unit-holders by a simple majority for winding up the six debt funds. Although there is a six week stay on the operation of the judgement, post that the fund house will have to seek the consent of the unitholders to close the six funds. Without the consent Franklin Templeton might have to re-open the six debt fund schemes. Along with that Franklin Templeton is also dealing with allegations that some employees of Franklin Templeton had redeemed their positions in the six schemes just ahead of winding up. These claims, however, were termed as ‘misleading’ by Sanjay Sapre, President, Franklin Templeton Asset Management.

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