MUMBAI: The trustees of Franklin Templeton India on Wednesday appointed Kotak Mahindra Bank to assist the trustees in monetising portfolio of the six shuttered schemes.
"The Trustees have appointed Kotak Mahindra Bank, who, through its debt capital markets team, will work closely with the Franklin Templeton Trustees, to assist with all portfolio actions in these six schemes that are being wound up," said Franklin Templeton in a press statement.
The Asset Management Company (AMC) had on 23 April announced that six of its debt schemes are being wound up due to severe illiquidity and redemption pressures. This shuttering of schemes left 300,000 investors in a lurch with total investment of Rs25,856 crore.
The appointment of an external advisor is based on Securities and Exchange Board of India’s (Sebi’s) advice, the AMC said in the press statement. The bank will act as the agent for board of trustees agent and provide independent advice and assistance through the entire process. This is to ensure that monetisation of underlying portfolio happens at the earliest possible time.
According to Franklin Templeton’s communication to investors on 15 May, the quickest refunds will be from its Ultra Short Term Fund: 9% of the assets under management will be refunded within three months of authorization, another 30% in next six months, the next 11% in one year and another 31% within two years. There is a question mark over the balance 19%. In some funds, the liquidation of portfolio will take more than 5 years. These funds are income opportunities fund and credit risk fund.
Franklin has also reached out to investors to register themselves for the e-voting process. In an email on 15 May, the AMC said as part of the winding up process, trustees need authorisation from investors to return the money at the earliest. A negative outcome in the voting could delay the process of liquidating the assets of the scheme and paying the proceeds to unit holders.
Even while the winding up process is starting, the schemes have continued to get prepayments from borrowers to extinguish their liabilities. So far, the AMC has received prepayment to the tune of ₹2000 crore to pay back the bank loans availed to meet redemption pressures. The recent prepayment was of ₹270 crore from Piramal Enterprises Ltd.