Franklin seeks external advisers to wind down its credit-risk funds

MUMBAI:Asset manager Franklin Templeton’s India unit is in the process of appointing an independent advisor to aid the winding-up of its six yield-oriented, managed credit funds.

The six schemes with total assets under management of ₹25,856 crore were shut down on April 23 owing to severe illiquidity and redemption pressures caused by the covid-19 pandemic.

Winding up a mutual fund scheme requires taking approvals from trustees, a majority of unit holders and the Securities and Exchange Board of India (Sebi), besides refunding money to unit holders.

Typically, the process involves the trustees calling for a meeting of unit holders to approve the winding-up by a simple majority and vote on any other necessary steps. However, lockdown hurdles are forcing Franklin to seek electronic voting alternatives.

“We are currently working on the process of seeking approval through electronic or other means, considering the operational hurdles posed by the covid19-related lockdown.

We are also working to appoint an independent advisor to assist the trustees (in addition to the services of the asset management company) in the process of winding-up,” a Franklin Templeton spokesperson said.

Note, that the lack of a positive outcome in voting could delay the process of liquidating the assets of the scheme, and paying the proceeds to unitholders, he added.