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UTI MF, Reliance MF sidepocket exposures to Altico Capital

Reliance Mutual Fund has an exposure of around Rs 205 crore to Altico Capital’s securities.

Updated: Sep 14, 2019, 11.45 AM IST
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Mumbai: Fund houses UTI Mutual Fund and Reliance Mutual Fund have segregated their exposure to Altico Capital following a payment default by the latter and a rating downgrade.

“In the light of credit event, we have segregated the portfolio of securities of Altico Capital held in Reliance Ultra Short Duration Fund immediately after the expiry of mandatory load free exit period of 30 days (i.e. September 25, 2019),” Reliance Mutual Fund said in a release.

UTI Mutual Fund proposed to create a segregated portfolio in respect of Altico Capital India in UTI Credit Risk Fund effective September 13 due to a downgrade of this security to “B” i.e. below investment grade, by CARE Ratings.

“The Board of Trustees of UTI Mutual Fund has approved the creation of segregated portfolio in UTI Credit Risk Fund. Investors are hereby informed that with effect from September 13 securities of Altico Capital India will be segregated from the total portfolio in the captioned scheme,” UTI Mutual Fund said in a release.

Reliance Mutual Fund has an exposure of around Rs 205 crore to Altico Capital’s securities, while UTI Mutual Fund has an exposure of Rs 201.82 crore.

Creation of segregated portfolios, called sidepocketing, is a mechanism to separate distressed, illiquid assets from other more liquid assets in a mutual fund portfolio.

Foreign private equity-backed Altico Capital, an NBFC with more than Rs 4,000 crore in outstanding loans, has missed interest payments raising the concerns over another round of mark down of asset value by lenders and further restricting funding for the industry.

The non-banking finance company missed interest payment of Rs 19.97 crore on an overseas loan taken from Dubai-based Mashreq Bank, it said in a notification to BSE. The bank had lent Rs 340 crore loan with six-year maturity.

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