Franklin Templeton scotches rumours of exiting India

Any speculation suggesting otherwise, or any rumours around sale of our business in India are incorrect and simply that -- rumours, says head of the US-based asset manager.

US-headquartered asset manager Franklin Templeton (FT) said on Friday that it has no plans to exit its India operations.

In a letter to investors, Sanjay Sapre, president of FT Mutual Fund, said: “I wish to clarify and re-iterate that Franklin Templeton’s commitment to India remains steadfast. We were early entrants in the Indian mutual fund industry and have remained a part of the industry even while many other global asset managers decided to leave. Please let me assure you, we have no plans to exit our India business. Any speculation suggesting otherwise, or any rumours around sale of our business in India are incorrect and simply that -- rumours.”

The statement comes in the wake of news reports that FT MF’s global chief Jennifer Johnson wrote to the Indian ambassador in Washington saying the asset manager will be forced to cut jobs and pull back its Indian operations if the Securities and Exchange Board of India (Sebi) levies a large fine or issues a disgorgement order over FT’s decision to wind up six of its debt schemes.

“Our engagement with government authorities, in India and globally, is also something we and many companies do, as a matter of course. We have endeavoured to keep all stakeholders, including the relevant government and diplomatic authorities appropriately informed of developments, and will continue to do so. Our intention in reaching out remains bringing the current matters to an appropriate and satisfactory conclusion,” Sapre added.

Sebi has issued show-cause notices to the fund house and its officials for redeeming their investments weeks before the closure announcement. FT has submitted detailed responses to those notices.

“We have great respect and full confidence in Sebi and all regulatory authorities. Please be assured that we have been fully transparent with the regulator and have extended our fullest cooperation to them, to help them examine the circumstances surrounding the winding up of the six schemes by Franklin Templeton last year,” Sapre said.

The asset manager on Friday also said all six schemes that were wound up are now cash positive and they have received total cash flows of Rs 15,776 crore till March 31. The flows have been from maturities, coupons, sale, and prepayments since winding up.

Cash available for distribution in all schemes now stands at Rs 1,874 crore after distribution of Rs 9,122 crore in February. Over the past fortnight, the six schemes received cash flows of Rs 505 crore. The net asset value (NAV) of all the six schemes was higher than what it was on April 23, 2020, when the fund house announced the decision to wind up.

Franklin manages assets worth over Rs 60,000 crore of two million investors in the country. India accounts for about a quarter of its global workforce.

“India is not just an attractive investment destination, but a country that has contributed greatly to our success,” Sapre said.

Over the past decade, several foreign fund houses -- like Morgan Stanley, ING, PineBridge, and Daiwa -- have exited India even as assets have grown at a healthy pace.