HDFC AMC being punished

The HDFC Asset Management Company (HDFC AMC) might be doing a good deed by providing exits to investors of some of its Fixed Maturity Plans (FMPs), but the market is not happy with this decision.

The stock price tanked over 6.5% today at Rs.1801.05; though it has recovered a bit, it remains firmly in the red.

HDFC AMC plans to transfer Rs.500 crore worth of the FMPs exposure to Essel Group firms to its own books.

This liquidity rescue plan is applicable to NCDs issued by Edisons Infrapower & Multiventures Private Limited and Sprit Infrapower & Multiventures Private Limited, companies promoted by the Essel group.

This liquidity arrangement shall only apply in case of FMP Schemes (having an exposure to the NCDs issued by the Essel Group Companies) which have either already matured in the month of April, 2019 and/ or will mature till the standstill arrangement entered into by the Company with Essel Group Companies is in force.

Provision of such liquidity arrangement will entail acquisition by the Company of NCDs issued by the Essel Group Companies held by such FMP Schemes at the prevailing valuation as on respective maturity/purchase dates.

The company has said that such liquidity arrangement was in its larger long term interest, purely as a measure to provide liquidity to the relevant unitholders.