Can liquidate 40-50% of Franklin Templeton's debt fund assets within a month: SBI MF

DP Singh, SBI Mutual Fund's chief business officer, tells Moneycontrol that it will avoid any conflict of interest and ensure a transparent process while selling securities

February 18, 2021 / 02:24 PM IST

SBI Mutual Fund (MF) has been asked by the Supreme Court to distribute cash in five of the wound-up schemes of Franklin Templeton (FT). The apex court has now directed SBI MF to sell the remaining Rs 17,000 crore worth of debt securities held in six schemes. In his first and exclusive media interaction, DP Singh, chief business officer of SBI MF, gives the details on how the firm plans to sell the securities to realise their optimal value. Singh says that unitholders’ trust will be retained. These securities would be sold transparently and any conflict of interest will be avoided – SBI MF and FT MF are, after all, competitors. He tells Moneycontrol’s Jash Kriplani that the fund house will be drafting a standard operating procedure (SOP) to seek SC’s approval in the next hearing. Excerpts:

What strategy will you adopt while selling the securities – sell the holdings as fast as possible or wait for realising the best-possible value? 

While we want to monetise all the assets at the earliest, we don’t want to compromise on giving optimum returns to unitholders. It looks like some portion of the portfolios can be monetised soon, may be in one month’s time. So, we will be able to give that portion to investors within one month’s time. The remaining portion will take some time. We will try to do it at the earliest, keeping the interests of unitholders in mind.

Of the Rs 17,000 crore assets, what is the sum that can be liquidated in one month’s time?

We have not studied the portfolio in detail yet, but it should be around 40-50 percent of the entire existing assets. It looks like we should be able to liquidate these assets within one month’s time.

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How will you ensure transparency throughout the process?

We still need to finalise on the platform we will be using for selling the assets. It cannot be done from Franklin Templeton’s platform; neither can it be done from our platform, because our systems are ring-fenced for our portfolios. SBI MF’s systems are such that they allow us to sell only those securities that exist in our own schemes.

We don’t want to disturb our systems. But we will ensure that the system and platform that we create for this purpose will be fully transparent and trustworthy. We want to make sure that the trust factor remains intact.

SBI MF is a competing fund house. How will securities held commonly by both fund houses be sold to ensure the best price?

Having similar securities in the portfolios is fine. There is no issue in that. But, we are seriously contemplating not to be part of the bidding process. In simple words, SBI MF will not buy FT’s securities that lie in its six wound-up schemes. We will not sell from one hand and buy with another hand. In the normal course, fund houses buy and sell debt securities from one another.

The platform to sell FT’s securities is likely to be on a one-to-many mode, so even if we are part of the bidding process, it will not make a material difference to the process. However, we don’t want to participate as buyers, even if we might be missing out on some opportunities. Let these assets go to other investors. There is anyways a huge market for us to look for investment opportunities.

Will SBI MF’s fund management team be involved in the process?

We will have to take guidance from our investment team, but they will not be actively involved. We have other people in our team, in the back-office and dealers, who are quite capable of handling this process.

How would you approach the securities that are held in the side-pockets of Franklin Templeton schemes?

We will be closely co-ordinating with the investment team of Franklin Templeton. They must have already done some work on these issues. Both for Franklin Templeton and for us, unitholders’ interests are most important. We would like to take benefit of the work that they have already done and move forward from there, so we don’t end up spending more time.
Jash Kriplani is a journalist with over ten years of experience. Based in Mumbai. Covering mutual funds, personal finance. His last stint was with Business Standard, where he covered mutual funds and other developments in the financial markets
first published: Feb 18, 2021 09:38 am

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