Franklin MF to appoint adviser for fund returns, will start investor vote

MUMBAI: Franklin Templeton Mutual Fund, the troubled fund house that’s winding up six of its debt schemes with assets aggregating nearly Rs 25,900 crore, is appointing an independent adviser to oversee the process of returning money to investors.
The fund house is also asking its investors to vote in favour of closing these six schemes. Additionally, it has warned investors that a negative vote may delay the process of closing the schemes and, in turn, that of returning the money.
In a letter to investors, the fund house’s president Sanjay Sapre said that the trustees of the schemes will be appointing an independent adviser to assist with the liquidation of the portfolios. On April 23, the fund had announced it was closing six of its debt schemes and said the illiquidity in the debt market due to Covid-19 pandemic-related issues was one of the reasons for it to take the extreme decision.
Sapre said that in the next few days, the fund house will also send a letter to its investors about the voting process. Under Sebi rules, investors need to agree to the fund house’s proposal to close the schemes. The MF can prepare a payment schedule and finalise payouts to its investors only after the voting process is complete and it gets a majority support of investors in each of the six schemes separately.
Sapre warned investors that a ‘negative’ voting will not reverse the winding up process and such a vote will not help the six schemes to recommence the redemption and subscription process. “The purpose of the vote is to authorise the trustees to take the next steps for disposal of the assets of the scheme and distribution of the proceeds to the unit-holders in accordance with regulations.”
Sapre assured investors that the six schemes continue to receive inflows regularly and so far all maturities and other commitments have been received as per schedule. “We continue to see a marked reduction in borrowing levels across some of our funds under winding-up, as we receive these cash flows via coupons, scheduled maturities and prepayments.”