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HDFC AMC falls 7%, erodes m-cap by Rs 2,500 crore

HDFC AMC will buy Rs 500 crore worth of NCDs of the Essel Group from the debt schemes that have exposure to these securities.

ETMarkets.com|
Updated: Jun 18, 2019, 03.50 PM IST
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NEW DELHI: Suffering their second worst fall ever, shares of HDFC Asset Management Company (HDFC AMC) plunged nearly 7 per cent in Tuesday's session, after it said it will buy Rs 500 crore worth of Non-Convertible Debentures (NCDs) of the Essel Group from the debt schemes that have exposure to these securities.

The sharp fall in the stock eroded its market capitalisation by over Rs 2,500 crore.

HDFC AMC has decided to provide a liquidity arrangement of up to Rs 500 crore to certain fixed maturity plans (FMPs) of the fund house to deal with the illiquidity faced by such schemes due to their exposure to non-convertible debentures (NCDs) issued by Essel group entities.

Last month, HDFC Asset Management had received two show cause notices from the Securities and Exchange Board of India (Sebi) in relation to the investments of fixed maturity plans of HDFC Mutual Fund in debt instruments of Essel Group companies.

In April, HDFC Mutual Fund had informed investors it plans to extend the tenure for one of its FMPs coming up for maturity by another year, due to its exposure to Essel group companies.

The shares of the company closed 6.32 per cent down at Rs 1,807.75 on BSE.
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