August
- 20th August: In an update to investors, FT informed that four schemes have received the maturity proceeds and interest payments from Vedanta Ltd. On August 17, Low Duration Fund, Ultra Short Bond Fund, Credit Risk Fund and Dynamic Accrual Fund received Rs 49 crore, Rs 864 crore, Rs 120 crore and Rs 16 crore, respectively including interest. The total cash flow (from April 24 till August 17) of the six schemes now stands at Rs 6072 crore.
Further, while Ultra Short Bond Fund (cash of 29%) and Dynamic Accrual Fund (cash of 12%) were already cash positive, Low Duration Fund and Credit Risk Fund have also turned cash positive with 1 per cent of their respective AUM available in cash.
- 18th August: FT has capped fresh purchases across a few of its funds of funds which had investments in two of the shutdown schemes. An investor can now only invest up to Rs 2 lakh and Rs 1 lakh per day, in Dynamic Asset Allocation and Multi Asset Solution FoF respectively. For the Life stage FoF, an investor can invest only up to Rs 50,000 per day in the 20s and 40s Plan and Rs 25,000 in 30s Plan and 50s Plus Plan. The gating is understood to be done to safeguard the interests of existing investors of these FoFs and prevent new investors from taking undue advantage of the evolving situation.
- 17th August: Giving a mid-month update, FT communicated that the 6 schemes under winding up received Rs 708 crore during 1-14 August, taking the total cash flows to Rs 4,988 crore till date.
- Based on the mid-month portfolio, Ultra Short Bond Fund had 21 per cent and Dynamic Accrual Fund had 12 per cent of their respective AUM available in cash for distribution subject to a successful unitholder vote.
- Borrowing levels in Low Duration Fund, Credit Risk Fund, Short Term Income Plan and Income Opportunities Fund stood at 1, 4, 23 and 37 per cent of their AUM, respectively.
- In its 6th August hearing, as requested by the petitioners, the Karnataka High Court granted time till 10th August to file responses. Further, reportedly, daily hearings would commence from 12th August.
- In its affidavit, FT reportedly said that according to SEBI, duration norms are to be met at the portfolio level and other AMCs also do so. Further, it mentioned that it labelled some funds as moderate-risk, even when other AMCs labelled the same funds as low-risk. Also, it said that the issuers it invested in were stable, with good credit history, at the time of investment.
July
- Based on the July-end portfolio, FT communicated, the six closed schemes had received a total of Rs 4,280 crore from maturities, pre-payments and coupon payments since the announcement of their closure in April. Rs 1,005 crore was received in July alone.
- Out of the six FT schemes, Low Duration Fund, Credit Risk Fund, Short Term Income Plan and Income Opportunities Fund had 1, 4, 26 and 38 per cent borrowings, respectively.
- 29th July: Brickworks downgraded NCDs of three future group firms. Two of these - Nufuture Digital (India) and Future Ideas - defaulted on payments. Rivaaz Trade Ventures, however, made payments of its dues on 31st July. On 31st July, the NAVs of Income Opportunities Fund, Credit Risk Fund, Short Term Income Plan and Dynamic Accrual Fund fell by 4.9, 2.3, 1.7 and 1.3 per cent, respectively.
- 23rd July: FT informed investors that two debt schemes faced default from Reliance Broadcast Network, an ADAG firm, after the issuer was unable to meet payment obligation due on its NCDs. One of the schemes was Short Term Income Plan. The fund house is in the process of initiating an appropriate enforcement action to recover dues.
- The Karnataka High Court rescheduled the hearing of the FT cases to 7th August.
- 13th July: In a letter to investors, FT refuted reports circulating on WhatsApp and other platforms that investors could face a loss of over Rs 20,000 crore in the schemes being wound up.
- On 10th July: The affected funds received the principal and the remaining interest payment of Rs 1252.88 crore for the security '8.25% Vodafone Idea Ltd. (10-July-2020)' held in the segregated portfolios. Full and final payment was made to investors.
- 8th July: The Karnataka High Court considered the matters related to the winding-up of six debt schemes and issued notices to the parties concerned. The parties were directed to file counter affidavit and responses, if any, by July 22, 2020 and July 29, 2020, respectively. The next hearing was scheduled for 15th July.
June
- 30 June: A few funds witnessed a small blip in NAV. FT informed investors that this was as the result of a maturity date reset for the securities of Edelweiss Rural & Corporate Services Ltd.
- Based on the June-end portfolio, FT communicated that the six schemes had received Rs 3,275 crore from maturities, pre-payments, and coupon payments from 24th April to 30th June.
- As of 30th June, Ultra Short Bond Fund had 13 per cent and Dynamic Accrual Fund had 4 per cent of their respective AUMs available to distribute to unitholders subject to a successful unitholder vote post legal clearances.
- Borrowing levels in Low Duration Fund, Credit Risk Fund, Short Term Income Plan and Income Opportunities Fund stood at 7, 9, 29 and 37 per cent of their AUM, respectively.
- 23rd June: In an update to investors, FT said Reliance Big Entertainment (already rated default grade) had defaulted on its obligations on 14th June. Five of the six impacted schemes had investments in these bonds. FT said that the share collateral was adequate to cover the current valuation of bonds.
- 19th June: The Supreme Court considered the special leave petition filed by FT and directed transfer of all pending cases to the Karnataka High Court and gave a three-month deadline. With this, all pending litigations (including SEBI's LPA) would now be heard in Karnataka High Court.
- 16th June: SEBI filed a Letter Patent Appeal (LPA) in the Gujarat High Court against the decision to stay the e-voting process.
- 12th June: The affected funds received interest payments of Rs 102.71 crore for the period June 12, 2019 to June 11, 2020 for the security '8.25% Vodafone Idea Ltd. (10-July-2020)' held in the segregated portfolios of the six schemes.
- FT filed a special leave petition before the Supreme Court against the Gujarat High Court.
- 8th June: The Gujarat High Court stayed FT's e-voting and unitholders' meet till forensic audit report was out. Further, the next hearing was scheduled on 12th June. Thus, the fund house temporarily suspended the e-voting process, where investors were to authorise the entire distribution process.
- 3rd June: Gujarat High Court issued a stay order on the upcoming e-voting. In response, on 5th June, FT filed a petition to vacate the stay.
- SEBI ordered a special audit into the FT case and hired a forensic audit firm and a chartered accountant to inspect the dealings of the six schemes.
May
- By May-end, borrowing levels in the other funds continued to decline. Low Duration Fund, Credit Risk Fund, Short Term Income Plan and Income Opportunities Fund had outstanding borrowings of 11, 11, 33 and 39 per cent of their AUM, respectively.
- Ultra Short Bond Fund and Dynamic Accrual Fund turned cash positive after repaying their outstanding borrowings.
- Various investors filed writ petitions in Chennai, Delhi, Ahmedabad High Courts and in the Supreme Court against FT's winding-up decision.
- 28th May: The trustees released notices on e-voting and unitholder's meet. Unitholders were provided a three-day window, from 9th June to 11th June to participate in e-voting, while the unitholder meet was to happen on 12th June.
- 22nd May: FT informed that Essel Infraprojects defaulted on payments to four of its shutdown schemes: Dynamic Accrual Fund, Credit Risk Fund, Short Term Income Plan and Low Duration Fund. There was no impact on the NAVs as the value of the shares held as collateral was greater than the current valuation of bonds.
- To facilitate an exit route for investors, SEBI put out a notice enabling schemes that are winding up to list their units on the stock exchange. The move came in the wake of FT's 23rd April decision.
- 20th May: FT Trustees said to have appointed Kotak Mahindra Bank to assist in the monetisation of the assets in the six schemes being wound up.
April
- 29th April: FT allowed moratorium to NCDs of three Future Group companies: Rivaaz Trade Ventures, Nufuture Digital (India) and Future Ideas.
- 24th April: The funds of funds which held the shutdown funds as the underlying wrote down about 50 per cent of the respective exposures, leading to massive one-day hit on their NAVs. These were Life Stage FoF 50s Plus, Multi Asset Solution, Life Stage FoF 40s, Dynamic Asset Allocation FoF, Life Stage FoF 30s and Life Stage FoF 20s.
- 23rd April: Franklin Templeton Mutual Fund (FT) announced the voluntary wind-up of six schemes: Low Duration Fund (borrowings of 8 per cent), Ultra Short Bond Fund (6 per cent), Short Term Income Plan (28 per cent), Credit Risk Fund (16 per cent), Dynamic Accrual Fund (1 per cent) and Income Opportunities Fund (26 per cent). These funds had AUM of over Rs 25,000 crore.
