The six schemes were shut by Franklin Templeton citing redemption pressure and the lack of liquidity in the bond market for its decision.
For the first time since 2017, venture investment has literally collapsed with a number of deals falling below the 100-mark at a tad over 90 in September.
Franklin Templeton India has informed investors that its six wound-up schemes have received Rs 8,741 crore since their closing. In the second half of October, Franklin Templeton said that the schemes have received Rs 438 crore from maturities, pre-payment and coupon payments. The six schemes were shut by Franklin Templeton citing redemption pressure and the lack of liquidity in the bond market for its decision. The move had prompted the Reserve Bank of India to step in to infuse liquidity into the markets.
Franklin Templeton said that during the second half of October, the closed funds received part payment from the Uttar Pradesh power corporation on one instrument, and also received full value on maturity of another instrument from the UP Power corporation. Along with that, Franklin Templeton received part payment for an instrument issue by Xander. “The cash available stands at Rs 5,441 crore as of October 29 for the four cash positive schemes, subject to fund running expenses,” Franklin Templeton India said on its website.
The six schemes, namely — Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund, and Franklin India Income Opportunities Fund — together had an asset under management (AUM) of Rs 26,000 crore when they were closed. Of these, Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Ultra Short Bond Fund, and Franklin India Credit Risk Fund are cash positive.
Earlier last month, the Karnataka High Court asked Franklin Templeton India seek the consent of unitholders before proceeding with the process of winding up six of its debt mutual funds schemes. There is a six week stay on the operation of the judgement. The fund house will now seek the consent of the unitholders to close the six funds, without the consent Franklin Templeton might have to re-open the six credit risk funds. The fund house is also dealing with allegations that some employees of Franklin Templeton had redeemed their positions in the six schemes just ahead of winding up. However, these reports have been termed as ‘misleading’ by Franklin Templeton Asset Management’s President Sanjay Sapre.