Franklin Templeton Mutual Fund will distribute ₹2,918.5 crore to unitholders of six debt mutual fund schemes, starting 1 September, according to a note issued by the fund house to mutual fund distributors.
With this, the schemes will have cumulatively returned ₹23,998.84 crore to investors or 96.18% of the net asset value of the six schemes that were wound up on 23 April 2020.
SBI Funds Management Pvt. Ltd is overseeing the liquidation of the schemes and the distribution of their proceeds, in line with the direction of the Supreme Court. Once the money is paid, a proportionate number of units get extinguished.
The six debt mutual funds were wound up by Franklin Templeton Mutual Fund, following heavy outflows. Some investors challenged the winding-up process and sought a vote on this. The apex court ruled that such a vote is required, and accordingly, consent of unitholders was sought in December 2020 and granted. Following the vote, the Supreme Court placed SBI Funds Management Pvt. Ltd in charge of the winding-up process.
The Securities and Exchange Board of India (Sebi) imposed penalties on Franklin Templeton Mutual Fund and some of its directors and barred it from launching new debt mutual fund schemes for two years. However, the Securities Appellate Tribunal stayed Sebi’s orders in this matter.
Investors in the six different schemes have received different levels of repayment. Those in Franklin India Low Duration Fund would have received 107.86%, including the upcoming September 2021 payout. Those in the Franklin India Short Term Income Plan, however, would have received 84.43%. Unitholders in Franklin India Ultra Short Bond Fund, Franklin India Income Opportunities Fund, Franklin India Credit Risk Fund and Franklin India Dynamic Accrual Fund would have received 99.58%, 94.53%, 93.35% and 93.09%, respectively.
A key factor to watch out for Franklin investors is a series of Vodafone Idea papers, which are due for interest payment on 2 and 3 September. The papers have an interest rate reset clause and a put/call option against them. They were placed into ‘segregated portfolios’ in January 2020 by the fund house.
