Four shut debt schemes of Franklin Templeton turn cash positive, receive Rs 6,486 crore

In a major respite to investors of Franklin Templeton, two more shuttered debt schemes have turned cash positive as of August 31. With this, four of six frozen schemes are cash positive as they repaid their entire outstanding dues, the fund house said in an update to investors.

Two more debt schemes - Franklin India Credit Risk Fund (FICRF) and Franklin India Low Duration Fund (FILDF) - have turned cash positive with 1 per cent and 5 per cent of their respective AUM (Assets under Management) available to distribute to unit holders as on August 31, 2020. The percentage is computed considering the total of all amounts receivable from the holdings as on August 31, 2020 plus the cash balance and investment in overnight call money market as on August 31, 2020.

Two of debt schemes namely Franklin India Dynamic Accrual (FIDA) and Franklin India Ultra Short Bond Fund (FIUBF) were already cash positive.

Around Rs 30,000 crore of investor wealth has struck in the six debt schemes funds of Franklin Templeton after they were voluntarily closed on April 23, 2020, in wake of liquidity crisis and redemption pressures in bond markets due to the coronavirus crisis. The six funds were 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.

Also Read: Franklin Templeton didn't take SEBI's approval to shut six debt schemes, reveals RTI

From April 24, 2020 till August 17, 2020 these six frozen schemes had received Rs 6,486 crore from maturities, pre-payments, and coupon payments. It received additional payment of Rs Rs 1498 crore between August 15-31.

Meanwhile, the borrowing levels in the other two schemes continue to come down steadily. Franklin India Short Term Income Plan (FISTIP) and Franklin India Income Opportunities Fund (FIIOF) now have an outstanding borrowing of 23.17 per cent and 37.22 per cent of their AUM, respectively.

Also Read: Gujarat HC stays Franklin Templeton MF's e-vote process for closure of six debt schemes

Franklin Templeton has not disburse any money to unit holders as e-voting and meeting regarding the same remained suspended due to stay order in the case by the Karnataka High Court. "Distribution of proceeds will only be possible after successful e-voting," Sanjay Sapre, president, Franklin Templeton Asset Managers India said on August 5.

On June 3, the Gujarat High Court had issued a stay order on Franklin Templeton's e-vote on liquidation of debt schemes that was scheduled to be held from June 9 to June 11. The American fund house has appointed Kotak Mahindra Bank to monitor the winding up process of the 6 schemes.

By Chitranjan Kumar

Also Read: BT Insight: Where 6 Franklin Templeton funds got stuck; recovery tougher