HDFC Asset Management Company (AMC) has received the approval of over 90% of the investors to roll over the fixed maturity plans (FMPs), which have seen a delay in repayments by two Essel Group companies.
The HDFC Fixed Maturity Plan – 1168 Days – February 2016 (1) which matured on Monday has been extended by over a year to April 29, 2020.
According to disclosures as on March 2019, HDFC Fixed Maturity Plan 1168 Days February 2016 (1) had invested around Rs 66.49 crore in Edisons Infrapower & Multiventures and Spirit Infrapower & Multiventures. The total assets of the scheme as on March 2019 stood at approximately `338.60 crore.
Industry players estimate that debt mutual funds have an exposure of around `6,000-7,000 crore to debt instruments of Essel Group companies. The debt papers of Essel Group are secured by shares of Zee Entertainment and Dish TV. However, most of the mutual funds and lenders, which had loaned funds to the Essel Group, have chosen not to sell the shares post the default. Lenders are understood to have granted the Essel Group companies a moratorium till September 2019 by which time fund houses expect the repayments.
Last week, one of the FMPs of Kotak Mutual Fund which had invested in debt instruments of Essel Group companies did not pay the entire redemption amount to investors on maturity. The Securities and Exchange Board of India (Sebi) rule allows fund houses to roll over their close-ended schemes if they get investors consent. Investors who do not want to continue with the scheme can redeem their investments at the prevailing net asset value (NAV). However, fund houses need to maintain the 20-25 rule (minimum of `20 crore and 25 investors). Investors need to to send a written consent to the fund house if they wish to remain invested in a scheme, which is getting rolled over.
As the consequence of agreeing to provide additional time to Essel Group promoters, the maturity of debt exposure in Essel Group has been extended beyond the maturity of few fixed maturity plans. HDFC MF will adopt either of the following options which it deems appropriate to safeguard the interest of unit holders. The first being FMPs that have exposure to Essel Group may be rolled over in accordance with the provision regulations 33(4) and other applicable regulations of SEBI(MF Regulations). All those unit holders who do not opt for roll over or have not given written consent shall be allowed to redeem their units at prevailing NAVs, a spokesperson for HDFC MF said.