Franklin Templeton Mutual Fund (MF) is expected to receive over Rs 6,000 crore by the end of September in the six debt schemes closed in April. The fund house is also working towards listing these schemes on the stock exchanges for those investors who need urgent liquidity. Santosh Kamath, MD and CIO (India Fixed Income) at Franklin Templeton, said from April 24 till June 30, the six schemes had received Rs 3,275 crore of cash. Further, Rs 3,200 crore was expected to come between July 1 and September 30, without resorting to any secondary market sale.
“We expect to receive over Rs 6000 crore across these funds by September 30 in the form of pre-payments, regular payments and coupons. The ultimate value realised will depend on how the situation improves going forward in terms of the overall credit cost,” added Kamath.
On April 23, six debt schemes with Rs 25,800 crore in assets were wound down by Franklin Templeton MF due to the severe market dislocation and illiquidity caused by the Covid-19 pandemic. The fund house also said it would aim for secondary market sale of securities at an optimal cost, subject to a successful unitholders vote.
According to the fund house, Franklin India Ultra Short Bond Fund and Franklin India Dynamic Accrual Fund had paid up all their borrowings and were cash positive. Franklin India Ultra Short Bond Fund had 13% of its assets under management (AUM) in cash as on June 30. While in two more scheme, Franklin India Credit Risk Fund and Franklin India Low Duration Fund, the borrowing level has come down to sub 10% from their original levels on April 24, without resorting to secondary market sale.
On Franklin Templeton MF being the sole investor in some securities, Santosh Kamath said, “The ownership pattern of an issuance is unlikely to have any impact on the credit risk. I know distribution partners and investors have developed concerns regarding these investment decisions. I want to assure you that all investment decisions were made after appropriate due diligence by the investment management team.”
Giving an example, he said there was a company called Vastu Housing Finance where the fund house is the predominant holder and the same was upgraded last month in a difficult market environment. It shows the strength of this company. “If we go back I remember when we invested in AU Finance or Equitas Finance or Tata Sky or Mahindra World City, we were among the only investor in those companies then and it turned out quite well for the schemes,” said Kamath.