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Takes Rs. 100 crore hit; disallows fresh investment in the scheme till October 31
In what could perhaps be the first such instance of a mutual fund writing off its entire exposure towards troubled IL&FS, BOI AXA Mutual Fund has decided to take a hit of a little more than Rs. 100 crore. The fund house had an exposure in IL&FS commercial paper through its Credit Risk Fund and decided to write off the entire exposure on Friday thereby taking a hit of more than 5% in the net asset value (NAV) of the scheme.
More redemptions
“In light of the recent developments around IL&FS, we expect more redemptions in the future and hence in order to to be fair to our existing investors, we decided to write-off the entire amount and have also disallowed fresh investment in the scheme till October 31,” said Sandeep Dasgupta, chief executive officer, BOI AXA Mutual Fund. The IL&FS paper accounted for about 5.4% of the scheme’s total assets under management (AUM) and was maturing on October 29. Incidentally, the scheme had already taken a 25% haircut on September 15 when IL&FS defaulted on its payment obligations towards some banks, insurance companies and other mutual fund houses.
“With the government intervention, we expect to recover our investment in IL&FS Ltd in due course. However, given that the maturity of our holding in IL&FS CP is on October 29, 2018 and that the roadmap for the revival is to be announced post maturity of our holding, there is strong likelihood that we may not receive our outstanding on the due date,” stated the fund house in a note to its investors.
Total AUM
As per Value Research, the fund house, which is a joint venture between Bank of India and AXA Investment Managers, had total assets under management (AUM) of Rs. 6,151 crore as on August 31.
A recent note prepared by the government stated that mutual funds had a combined exposure of about Rs. 2,800 crore towards IL&FS paper.
Source : https://www.thehindu.com/todays-paper/tp-business/boi-axa-fund-writes-off-ilfs-exposure/article25161949.ece
