LIC Mutual Fund set to acquire schemes of IDBI Mutual Fund

IDBI MF MERGER WITH LIC MF

LIC Mutual Fund (LICMF) is all set to take over the schemes of IDBI Mutual Fund (IDBIMF). IDBIMF has sent a letter to all unitholders of its schemes to this effect. The communication also specifies the proposed change in sponsorship, trusteeship, management, and administration of the IDBIMF schemes. Since these changes are fundamental in nature, as per norms, the unitholders of IDBIMF are also offered an exit option without any exit load.

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Out of the 20 schemes of IDBIMF, 10 will be merged with schemes of LICMF in the same categories. For example, the IDBI Equity Advantage Fund, an ELSS, will be merged with the LICMF Tax Plan. These 10 include five equity funds, one hybrid, and the remaining debt products. The remaining 10 schemes of the fund house will be transferred to LICMF and renamed. These include two schemes that invest in gold, one hybrid, and the remaining, equity schemes.

As per the scheme of arrangement between the two fund houses, going forward, LICMF will manage, operate, and administer all of IDBIMF’s schemes. The unitholders of IDBIMF have also been sent a ballot form seeking their approval for this scheme of arrangement. "The voting window will remain open from June 20, 2023, until July 19, 2023 (both days inclusive). All duly signed and filled-up ballot papers received by the Registrar and votes received electronically during this period will be accepted and considered, if found valid, for the purpose of determining the results of the ballot," the letter said. Each unitholder will be entitled to one vote for every unit held.

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Since these changes, including the merger and transfer of schemes of IDBIMF and the change of asset management company (AMC) of IDBIMF schemes, amount to changes in fundamental attributes, the unitholders of schemes of IDBIMF are offered the option to exit their investments without paying an exit load, if any, before July 19, 2023. Though this option is provided to the unitholders, it is not mandatory for them to exercise it. Unitholders can remain invested if they are content with the changes.

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At the end of the exit window period and voting exercise, IDBIMF will notify the unitholders about the date on which the scheme mergers and transfers will take place.

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As per Value Research, as of May 31, 2023, LICMF managed assets worth Rs 18,719 crore, while IDBI MF had assets worth Rs 3,805 crore.