Franklin Templeton India MF has approached unitholders to seek consent for winding up of the six debt schemes. The voting will begin at 9 am on December 26 and go on till 6 pm, December 28. The voting will be done through electronic mode.
There will also be a unitholders’ meeting with the trustees on December 29, where unitholders will get a chance to meet the fund’s trustees through video conferencing. Unitholders will also be allowed to vote during this meeting. The fund house has sought consent from the unitholders for each scheme separately. If unitholders hold more than one of these six debt funds, they will have to vote for each of the schemes held.
Here are the timings for video conferencing for each scheme:
|
Scheme |
Video Conference Meeting hours |
|
Franklin India Ultra Short Bond Fund |
Dec 29 at 9-10.30 AM |
|
Franklin India Low Duration Fund |
Dec 29 at 10.45-11.45 AM |
|
Franklin India Dynamic Accrual Fund |
Dec 29 at 12-1 PM |
|
Franklin India Credit Risk Fund |
Dec 29 at 2-3 PM |
|
Franklin India Income Opportunities Fund |
Dec 29 at 3.15-4.15 PM |
|
Franklin India Short Term Income Plan |
Dec 29 at 4.30-5.30 PM |
The vote is to ask investors of these schemes if they want the schemes to be wound up or not.
The fund house argued that a “Yes” vote would allow them to proceed with an orderly monetization of assets and distribution of monies to unitholders. This will also mean that the schemes will not make a distress sale of portfolio securities to fund redemptions.
On the other hand, a simple majority of “No” vote will mean the funds will be required to re-open for purchases and redemptions. The schemes may suffer significant losses due to the need to sell securities at distress prices to meet heightened redemption pressure.
Santosh Kamath, CIO, Franklin Templeton Fixed Income India, said, “From April 24, 2020 to November 27, 2020, the six schemes under winding up have received Rs. 11,576 crore from maturities, pre-payments, and coupons. Four out of the six schemes are already cash positive and have close to Rs. 7,226 crore available to return to unitholders, subject to fund running expenses. All of this cash has been received without any secondary market sale (active monetization) of the securities in these six schemes. This points to the fact that the securities held in the funds continue to retain value.”
Addressing concerns on the quality of the portfolio and the schemes’ ability to monetize assets, Kamath added, “It will be pertinent to note that of the Rs. 11,576 crore received since April 24, 2020, nearly half of this amount has been received from securities rated ‘A’, followed by securities rated ’AA’. Many of these securities were unlisted, and in many instances, Franklin Templeton Schemes were majority investors.”
The fund house also argued that voting for an orderly winding up does not mean a lengthy wait for return of monies.
Sanjay Sapre, President, Franklin Templeton – India, said, “We can accelerate the process of monetizing scheme assets once we have unitholders’ consent for an orderly winding up. We believe that monetizing a large amount of portfolio assets over a period of time in an orderly manner will result in better outcomes for unitholders as compared to being forced to sell the same securities as a ‘distress sale’ in a short period of time.”
As on December 1, AUM of the six schemes stood at Rs 25,880 crore.
