Earlier this week, our capital markets regulator Sebi, rather surreptitiously through stock exchanges, issued directions on 331 suspected shell companies.
Sebi should have issued a press release when it communicated to the stock exchanges to take the measures. But Sebi did not do this.
Anyways, I wrote something (for the news organisation I work for currently) on the impact of the shell companies order on mutual funds --> http://www.cogencis.com/differentiators/ShareNews.aspx?newsId=988544
SEBI order on shell cos likely to hit NAVs of around 25 MF schemes
Cogencis, Wednesday, Aug 9
By Rajesh Gajra
Net asset values of a dozen mutual fund schemes are likely to get affected due to their holdings in a couple of stocks which are a part of the trading suspension list emanating from latest directive by Securities and Exchange Board of India on 331 alleged shell companies.
Mutual funds, currently, do not have holdings in a vast majority of the alleged shell companies.
Of the 331 alleged shell companies, 48 are listed on the National Stock Exchange of India and the exchange has suspended trading in their shares from Tuesday.
Mutual funds held shares only in J Kumar Infraprojects Ltd and SQS India BFSI Ltd of the 48 NSE-listed alleged shell companies, data from Cogencis' Corporate Fundamental Database showed.
In the case of J Kumar Infraprojects, as of Jun 30, 24 mutual fund schemes across seven fund houses had holdings in the company as of Jun 30, and their collective holding value on that day was 2.55 bln rupees.
Of these, a dozen schemes' exposure to J Kumar Infraprojects' shares exceeded 0.5% as of Jun 30 (see table). The holding of IDFC Infrastructure Fund in shares of the company was worth 92 mln rupees or 3.1% of the scheme's assets under management, as of Jun 30.
Birla Sun Life Small and Midcap Fund held 223-mln-rupee worth of J Kumar Infraprojects' shares amounting to 2.4% of the scheme assets, while DSP BlackRock India T.I.G.E.R Fund's holding was to the tune of 257 mln rupees or 1.6% of the scheme assets.
In terms of absolute value, UTI Mid Cap Fund held J Kumar Infraprojects' shares worth 333 mln rupees making up for 0.9% of the AUM of the scheme.
SQS India BFSI, the other alleged shell company having mutual fund holdings, will have an affect on only one mutual fund scheme. Union Small and Micap Fund held 1.2% of its AUM of 2.37 bln rupees as on Jul 31 in SQS India BFSI shares.
As per the SEBI directive to stock exchanges, trading in the alleged shell companies will be permitted only once a month on the first Monday. Further, the trading shall take place at a price not exceeding the last traded price, which means the share price can not go up.
This will hit the valuation of the affected stocks in mutual fund scheme portfolios. And, the higher the exposure of a mutual fund scheme to the affected stocks, the higher will be the impact on the scheme NAV.
The effect on the NAVs of the affected schemes will be seen over the course of the next couple of weeks and till such time as J Kumar Infraprojects and SQS India BFSI are able to establish to the stock exchanges through documentary evidence that they are not shell companies.
The table below lists the mutual fund schemes where the holding in shares of J.Kumar Infraprojects was more than 0.5% of their assets as of June 30
Holding value* AUM
------------- --- % of holding
(In mln rupees) to AUM
--------------------- ------------
IDFC Infrastructure 92 2960 3.1
Birla SL Small & Midcap 223 9167 2.4
Birla SL Infrastructure 102 5488 1.9
Birla SL Spl. Situations 30 1590 1.9
DSP BR India T.I.G.E.R 257 15580 1.6
HDFC Capital Builder 235 16040 1.5
UTI Infrastructure 191 15630 1.2
UTI Mid Cap 333 38600 0.9
UTI Multi Cap 33 3730 0.9
Reliance Small Cap 297 39300 0.8
Edelweiss Mid & Small Cap 28 4620 0.6
HDFC Infrastructure 82 13110 0.6
* based on the share price of Jun 30
End
Sebi should have issued a press release when it communicated to the stock exchanges to take the measures. But Sebi did not do this.
Anyways, I wrote something (for the news organisation I work for currently) on the impact of the shell companies order on mutual funds --> http://www.cogencis.com/differentiators/ShareNews.aspx?newsId=988544
SEBI order on shell cos likely to hit NAVs of around 25 MF schemes
Cogencis, Wednesday, Aug 9
By Rajesh Gajra
Net asset values of a dozen mutual fund schemes are likely to get affected due to their holdings in a couple of stocks which are a part of the trading suspension list emanating from latest directive by Securities and Exchange Board of India on 331 alleged shell companies.
Mutual funds, currently, do not have holdings in a vast majority of the alleged shell companies.
Of the 331 alleged shell companies, 48 are listed on the National Stock Exchange of India and the exchange has suspended trading in their shares from Tuesday.
Mutual funds held shares only in J Kumar Infraprojects Ltd and SQS India BFSI Ltd of the 48 NSE-listed alleged shell companies, data from Cogencis' Corporate Fundamental Database showed.
In the case of J Kumar Infraprojects, as of Jun 30, 24 mutual fund schemes across seven fund houses had holdings in the company as of Jun 30, and their collective holding value on that day was 2.55 bln rupees.
Of these, a dozen schemes' exposure to J Kumar Infraprojects' shares exceeded 0.5% as of Jun 30 (see table). The holding of IDFC Infrastructure Fund in shares of the company was worth 92 mln rupees or 3.1% of the scheme's assets under management, as of Jun 30.
Birla Sun Life Small and Midcap Fund held 223-mln-rupee worth of J Kumar Infraprojects' shares amounting to 2.4% of the scheme assets, while DSP BlackRock India T.I.G.E.R Fund's holding was to the tune of 257 mln rupees or 1.6% of the scheme assets.
In terms of absolute value, UTI Mid Cap Fund held J Kumar Infraprojects' shares worth 333 mln rupees making up for 0.9% of the AUM of the scheme.
SQS India BFSI, the other alleged shell company having mutual fund holdings, will have an affect on only one mutual fund scheme. Union Small and Micap Fund held 1.2% of its AUM of 2.37 bln rupees as on Jul 31 in SQS India BFSI shares.
As per the SEBI directive to stock exchanges, trading in the alleged shell companies will be permitted only once a month on the first Monday. Further, the trading shall take place at a price not exceeding the last traded price, which means the share price can not go up.
This will hit the valuation of the affected stocks in mutual fund scheme portfolios. And, the higher the exposure of a mutual fund scheme to the affected stocks, the higher will be the impact on the scheme NAV.
The effect on the NAVs of the affected schemes will be seen over the course of the next couple of weeks and till such time as J Kumar Infraprojects and SQS India BFSI are able to establish to the stock exchanges through documentary evidence that they are not shell companies.
The table below lists the mutual fund schemes where the holding in shares of J.Kumar Infraprojects was more than 0.5% of their assets as of June 30
Holding value* AUM
------------- --- % of holding
(In mln rupees) to AUM
--------------------- ------------
IDFC Infrastructure 92 2960 3.1
Birla SL Small & Midcap 223 9167 2.4
Birla SL Infrastructure 102 5488 1.9
Birla SL Spl. Situations 30 1590 1.9
DSP BR India T.I.G.E.R 257 15580 1.6
HDFC Capital Builder 235 16040 1.5
UTI Infrastructure 191 15630 1.2
UTI Mid Cap 333 38600 0.9
UTI Multi Cap 33 3730 0.9
Reliance Small Cap 297 39300 0.8
Edelweiss Mid & Small Cap 28 4620 0.6
HDFC Infrastructure 82 13110 0.6
* based on the share price of Jun 30
End
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