Heavy investor outflows since the IL&FS crisis
last year had led to shrinkage in the schemes’ size, due to which concentration in certain papers had risen sharply.
PGIM India’s Credit Risk Fund had 8.4 per cent exposure to RBBNH and 5.89 per cent exposure to RCFL. The Credit Risk Fund saw 4.9 per cent jump in NAV, while PGIM India Low Duration Fund (18.62 per cent exposure to RBBNH) saw 6.9 per cent jump.
In mid-September, RBBNH was downgraded to 'D' or default grade, triggering a 50 per cent mark down on these exposures.
PGIM India had earlier informed investors that exposures to RBBNH were ring-fenced and secured against shares of Reliance Nippon Asset Management (RNam), which offered a line of sight on the recovery of its dues. These loan-against-share exposures were secured by promoters’ shares in RNam, with an equity cover of 1.75x.
"We are pleased that the collateral and payment mechanism that we put in place with regard to the investments in these bonds ensured that investors didn't lose any money," said Ajit Menon, chief executive officer, PGIM India.
The maturities related to debt papers of RBBNH and RCF were preponed to October 10, to avoid any potential stress on these papers.
According to the fund house, it has no outstanding exposure to any Anil Ambani
group firm following these payments.
While the schemes had enabling provisions in place to side-pocket stressed exposures, given the near-term visibility of payments, the fund house decided to mark down the RBBNH exposures instead.
Side-pocketinng is a mechanism that fund houses use to sift bad or risky assets from other liquid investments in their debt portfolios.
On Friday, the financial services arm of Anil Ambani
group -- Reliance Capital -- announced that it had completed of 21.54 per cent stake sale in RNam to Japan-based Nippon Life for sale proceeds of Rs 3,030 crore.