Franklin Templeton update!

The Supreme Court has directed Franklin Templeton to distribute funds from cash positive wound-up schemes. The court has asked the fund house to return the amount to investors within the next 20 days, according to media reports. The table below shows Cash Positive schemes of Franklin Templeton.

How much money can investors expect to receive?

While the fund house has said that it will update on the next steps soon, it has released the details of cash available in each scheme. The six schemes have received cash payments totalling to Rs 14,391 crore. Some of this was used to repay money borrowed to meet redemptions, leaving cash available at Rs 9,698 crore (as on Jan 31st). The amount available for immediate distribution is Rs 9,100 crore (as on Jan 15th) as per the Supreme Court order.

The recovery percentage varies from scheme to scheme. Unitholders will receive the funds in proportion to the units held by them. Unitholders of Franklin India Income Opportunities Fund (FIIOF) will have to wait a longer to receive payouts, as the scheme is not yet cash-positive. Investor assets stuck in this scheme stood at Rs 1,742 crore as of January 29, 2021. The next hearing in this matter is scheduled for February 9, 2021.

What happens to the remaining amount?

In the recently concluded voting process in Dec-20, investors had voted in favour of winding up the schemes. Accordingly, Franklin Templeton Mutual Fund may soon be able to sell securities held in the schemes to return money faster to investors (subject to directions of the Supreme Court). However, since most of the underlying securities are illiquid, the amount garnered will depend on market conditions, and could be a time-taking process.