Four shut schemes of Franklin Templeton Fund face default in payments by Rivaaz Trade Ventures Pvt Ltd (RTVPL) due on August 31. RTVPL is a Future group entity. ‘Due to default in payment, the securities of RTVPL will be valued at zero basis AMFI standard hair cut matrix,’ says a note by Franklin Templeton Mutual Fund. Accordingly, this would be reflected in the NAV movement for August 31,2020, the note added.
The four schemes of the troubled mutual fund house that had exposure to Rivaaz Trade Ventures are, Franklin India Short Term Income Plan, Franklin India Dynamic Accrual Fund, Franklin India Income Opportunities Fund and Franklin India Credit Risk Fund.
Scheme-wise exposure details in Rivaaz Trade Ventures, a Future group entity as on August 31 is as below. The securities will now be valued at ‘zero’.
Scheme Name, % allocation of AUM to RTVPL
Franklin India Short Term Income Plan, 5.02%
Franklin India Dynamic Accrual Fund, 3.02%
Franklin India Income Opportunities Fund, 6.32%
Franklin India Credit Risk Fund, 0.33%
On August 29, Reliance Retail announced acquisition of retail and wholesale business and logistics and warehousing business of the Future Group, on a slump sale basis, for lumpsum aggregate consideration of ₹24,713 crore.
“After the amalgamation Future Enterprises Ltd is expected to conclude the slump sale. Further, Future Enterprises is expected to raise ₹2,800 crore by way of preferential allotment to Reliance Retail through a combination of equity shares and warrants,” read the note by Franklin Templeton.
Franklin Templeton believes the proposed sale announcement is a positive development for the NCDs held by schemes of Franklin Templeton Mutual Fund.
“We understand NCDs held by Franklin Templeton Mutual Fund are proposed to be repaid from the transaction, subject to regulatory approvals,” says the note.