Franklin Seeks Investor Nod to Liquidate Six India Funds

(Bloomberg) -- Franklin Templeton Asset Management (India) Pvt. is seeking investor approval to liquidate six debt schemes it shut last month in the country’s biggest-ever fund freeze.

The trustees of the stressed funds will reach out to investors in the next few days to begin the voting process on selling off the underlying assets in the funds, Sanjay Sapre, president at Franklin Templeton India, said in a letter to investors. The company needs majority approval to kickstart proceedings.

Franklin is under pressure to speed up recovery from the shuttered funds after India’s markets regulator asked the asset manager to focus on returning the money as soon as possible. The sudden closure was a fresh blow to the country’s credit markets, which were already reeling from the pandemic-induced lockdown and a prolonged shadow banking crisis, pushing contagion risks higher.

Read about fresh crisis looming for India shadow banks after fund closures

“If trustees do not receive authorization to proceed with disposal of assets of the scheme, this may delay the process of monetizing such assets and distribution of proceeds,” Sapre said. “Some investors believe that by voting in the ‘negative’, the winding up will be reversed and that the six schemes will recommence the redemption and subscription process. This is not true.”

“The reason for winding up these six schemes was to preserve the of your investments and return your money at the earliest,” Sapre said.

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