Adani Group’s pre-payment of dues in commercial papers to mutual funds was aimed at boosting confidence among investors. However, asset managers seem to be wary of lending more to the group in the current situation. Fixed income managers in mutual funds are wary of uncertainty with the SEBI probing the Hindenburg report's allegations against the Adani group. The same managers also told CNBC-TV18 that they don’t want to dent investor confidence by lending to companies which are facing any kind of regulatory probe.
In a bid to shore up confidence among lenders, the Adani Group is clearing all its dues to mutual funds via commercial papers maturing up to March. The fund houses that are getting the pre-payments are HDFC Mutual Fund and Aditya Birla Sun Life Mutual Fund. SBI MF received a payment of Rs 1,000 crore and has no exposure left to Adani commercial papers. "Our exposure to Adani port is now zero. The CP payment was scheduled maturity”, SBI MF said.
Aditya Birla Sun Life (ABSL) Mutual Fund has also received Rs 500 crore on maturity and HDFC MF will get Rs 250 crore from the Adani Group. Sources said the Adani Group has informed the mutual funds that it will clear the dues up to March in a few days, sources told CNBC-TV18. Both, ABSL and HDFC mutual funds did not comment on CNBC-TV18's queries.
The schemes that had exposure to these commercial papers included the ABSL Corporate Bond Fund, ABSL Credit Risk Fund, ABSL Dynamic Bond Fund, ABSL Liquid Fund, ABSL Low Duration Fund, ABSL Medium Term Plan, ABSL Short Term Fund, HDFC Liquid Fund and SBI Liquid Fund. Commercial papers are basically unsecured, short-term debt papers issued by companies that are to be repaid by a certain pre-decided date.
The mutual fund houses that CNBC-TV18 spoke to said that even though there is no doubt that the company has cash to pay its dues, the controversy around the group cannot be ignored. “From a credit point of view, we can still think about lending to them but from a sentiment point of view, it is a bad decision. As a mutual fund, retail investor confidence is primary to us and we have seen how retail investors have reacted in the past to situations like this. After IL&FS, we didn’t lend to many strong NBFCs for the same reason and this time it will be no different,” said the head of a top mutual fund house, requesting anonymity.
On Tuesday, CNBC-TV18 reached out to the Adani Group for a response to this story. While the company has not yet commented on the queries, the group has been maintaining that the balance sheet of its independent portfolio companies is very strong and the entities have industry-leading project development, strong cashflows and a fully-funded business plan. Company officials have said in the past that they are confident about the ability of the company to deliver superior returns to shareholders.
Currently, the mutual fund industry has a very small exposure to commercial papers of Adani group and most of them are maturing in the next few months. Some mutual funds stayed away from the group papers even before the Hindenburg report came out. “As an asset manager, we are willing to make less returns but not willing to take extra risk, especially on the debt side. If we are a little concerned, we don’t take the risk. In this case, we were wary about issues in corporate governance even before the report came to light. Investors have been extra cautious after DHFL, IL&Fs etc and we want to be cautious too", said the CEO of another big mutual fund house.
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