JPMorgan Asset Management Company has received the approval from a majority of its unitholders to segregate illiquid assets of JPMorgan India Treasury Fund and JPMorgan India Short Term Income Fund. The split will allow investors to redeem liquid units from both schemes.
The vote was announced by JPMorgan AMC on September 14. The move came after investments in Amtek Auto went bad. As investors started pulling out their money, JPMorgan capped redemptions at 1% of total outstanding units on both schemes, on August 28.
According to a notice on JPMorgan AMC website, 98.98% of the valid votes were received from unitholders of JPMorgan India Treasury Fund and 98.69% of votes were received from unitholders of JPMorgan Short Term Income Fund to the proposal to segregate the assets of the two schemes.
After the proposed segregation, one set of units will have investments made in Amtek Auto, while the other will comprise all other investments and cash holdings. “The unitholders of respective schemes are hereby informed that for the implementation of the proposed segregation, the segregation effective date will be September 28, 2015, and the record time will be 9 a.m. (IST) on September 28, 2015,” the notice said.
Both schemes have exposure to a secured redeemable non-convertible debenture issued by Amtek Auto, which is currently illiquid in the market owing to credit concerns of the issuer. On August 27, the credit rating of Amtek’s previously rated other non-convertible debentures was downgraded from “BWR A+” to “BWR C” by Brickwork Ratings.
Immediately thereafter, the reference price of the bond held by the two JPMorgan schemes was reduced to 75% by Crisil and Icra. This change in price was reflected in each scheme’s NAV on August 28 and subsequently the two schemes received an unexpectedly high level of redemption requests.
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