SBI Mutual Fund completes Franklin Templeton's debt fund asset sale

Investors in the six shuttered schemes get Rs 27,508 crore, 9% higher than what funds owed in 2020

Franklin Templeton

Photo: Bloomberg

Abhishek Kumar Mumbai

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Investors of six wound up debt schemes of Franklin Templeton Mutual Fund (FTMF) will soon be paid the full amount against their units. This would be after the completion of asset sale process by SBI Funds Management, which was appointed by the Supreme Court (SC) in February 2021 to oversee the liquidation of assets.

“The orderly liquidation has resulted in the unitholders of all the six schemes under winding up receiving over 100 per cent of the respective reported AUM (assets under management) values as of April 23, 2020. The total amount disbursed ranges between 107.2 per cent and 113.4 per cent of the respective reported AUM values. The latest tranche of payment for the unitholders of Franklin India Short Term Income Plan will be processed and released shortly,” said a Franklin Templeton spokesperson.

The fund house has liquidated 217 securities, leading to total distribution of around Rs 27,508 crores, 9 per cent higher than the value of the securities as on the date of winding up. The six schemes had AUM of Rs 25,215 crore before they were closed for redemptions.

FTMF in April 2020 announced shutting down of the six debt mutual fund schemes citing redemption pressure amid lack of liquidity in the bond market.

After the winding up of schemes, investors had approached various courts against the decision. Later, the SC had transferred all the petitions to the Karnataka High Court (HC), which, in October 2020, ruled that unitholders' consent is required for winding up of schemes. The MF had then conducted an e-voting.

Objections were raised against the e-voting but they were quashed by the SC in February 2021. The apex court had then directed SBI Funds Management to sell the assets lying in the six schemes and repay investors on a 'best-effort basis'.

In the press release on Tuesday, SBI Funds Management said that the liquidation activity in the six FT schemes — Low Duration Fund, Dynamic Accrual Fund, Credit Risk Fund, Short Term Income Plan, Ultra Short Bond Fund, and Income Opportunities Fund — was done without creating any market dislocation in order to get the best liquidation value and safeguard the interest of unitholders of FTMF.

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Even as the schemes have paid off their dues to investors, FTMF remains engaged on the legal front. It had approached the Securities Appellate Tribunal (SAT) against the Securities and Exchange Board of India's (Sebi’s) order levying a Rs 5 crore fine on the asset manager. The fine was stayed by SAT in June 2021 and the case is still going on.

The fund house recently announced a reshuffle of its fixed-income investment team. The AMC has plans to venture into the alternatives business, beginning with private credit.


First Published: Aug 22 2023 | 8:26 PM IST

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