The net asset value (NAV) of four Franklin Templeton Mutual Fund schemes fell by up to 6.32 percent after Rivaaz Trade Ventures, a Future Group firm, defaulted on its scheduled debt obligations due on 31 August 2020. The asset management company has been forced to mark its debt down to zero.
In a note to investors, the AMC added that Future Group has proposed to repay the debt from its stake sales to Reliance Retail.
The four schemes exposed are Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund, Franklin India Income Opportunities Fund and Franklin India Short Term Income Plan with exposures at 0.33 percent, 3.02 percent, 6.32 percent and 5.02 percent, respectively, of scheme assets on 30 August.
Due to the default, Franklin Templeton will value these securities at zero, on the basis of AMFI standard hair cut matrix.
The AMC in its note to investors said, "based on representations from the Future Group we understand NCDs held by the fund house are proposed to be repaid from proceeds of the transaction. We believe the proposed sale announcement is a positive development for the NCDs held by schemes of FTMF. We are closely tracking developments around the same."