Franklin Templeton Asset Management has appointed Kotak Mahindra Bank to monetise assets of six schemes of Franklin Templeton Mutual Fund that are being wound up.
On April 23, Franklin Templeton Mutual Fund had said it would wind up six schemes - Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund - citing severe illiquidity and redemption pressures caused by the COVID-19 pandemic.
As per SEBI, the winding up process will have legal and operational challenges. For instance, the fund house has to take trustee approvals and will also need consent of majority of unit holders.
Kotak Mahindra Bank through its Debt Capital Markets team will work closely with Franklin Templeton Trustees, to assist with all portfolio actions in these six schemes that are being wound up, the release stated.
"Franklin Templeton is committed to ensuring an orderly and equitable exit for all investors at the earliest possible time, and we will partner with the Board of Trustees and Kotak Mahindra Bank to ensure an efficient wind-up of these schemes, while preserving maximum value for our investors," said Sanjay Sapre, President, Franklin Templeton – India.
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This move comes after market regulator SEBI asked the fund house to focus on repaying investors at the earliest.
For winding up its six debt schemes, Franklin Templeton Mutual Fund has already started getting in touch with them with regards to voting process to get their consent.
However, a negative outcome in the voting may delay the process to liquidate assets of the scheme and payment of money to investors, the fund house had said in a note to investors written on May 14.
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Explaining about the voting process, Sapre had said as a part of the winding up process, trustees need authorisation from investors to return the money at the earliest.
Once the trustees receive authorisation, next steps include monetisation of assets and distribution of money from the respective schemes.
An important point to note is that the payment schedule or payouts can be finalised and implemented only after the successful completion of the voting process.