HDFC MF provides liquidity for FMPs

To benefit those facing Essel exposure Investors in fixed maturity plans (FMPs) of HDFC Mutual Fund that have exposure towards Essel Group paper will be able to exit the scheme as the fund house has decided to take the exposure on its books. In a statement issued to the stock exchanges on Monday, the asset management company said that it had decided to provide a liquidity arrangement to certain FMP schemes to deal with the illiquidity faced by such schemes due to their exposure to the non-convertible debentures issued by Essel Group companies. “The liquidity arrangement may involve an aggregate outlay not exceeding ₹5000000000 and will be put in place shortly,” said the statement. “Such liquidity arrangement is in the larger long-term interest of the company and is being undertaken purely as a measure to provide liquidity to the relevant unit holders,” it added. The liquidity arrangement, however, will only be applicable for FMPs that have either already matured in April and/or will mature till the standstill arrangement entered into by the fund house with Essel Group companies is in force. The move comes just days after the fund house disclosed that the SEBI had initiated adjudication proceedings against the trustees of HDFC Mutual Fund for the fund house’s investments in the debt instruments of Essel Group.