Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now

You can switch off notifications anytime using browser settings.
ET Wealth
Stock Analysis, IPO, Mutual Funds, Bonds & More

Kotak Mutual Fund’s Nilesh Shah reassures investors

Shah explained the rationale behind the fund house’s decision to allow Essel Group more time to pay the money back.

ET Online|
Apr 12, 2019, 12.57 PM IST
nilesh shah
Nilesh Shah, CEO, Kotak Mutual Funds, has written to mutual fund distributors that the fund house has taken actions which it believes was in the best interest of unitholders. He also said that the decision was taken after consultation with `majority of lenders who collectively had more than Rs 13,500 crore exposure to Essel Group promoters.’

Mutual funds had an exposure of Rs 7,500 crore to the group which is widely referred to as Zee Group. NBFCs had an exposure of Rs 4,000 crore, and overseas lenders Rs 2,000 crore to the troubled group.

In a note that started with 'there have been many articles in the media about Kotak FMP,’ Shah explained the rationale behind the fund house’s decision to allow Essel Group more time to pay the money back.

He said the fund house had two choices: One, sell the shares and risk sub optimal recovery or extend time for a shot at full recovery. Second, to roll over the FMP or Pay majority of money due and withheld some part.

“We took the call of paying back majority of money to unitholders on maturity and allowing time to Essel Group promoters to pay back our dues,” he said.

He also said, “I would like to reassure you that this and similar kind of securities are invested only in the funds which are mandated to take higher yield assets which are popularly known as credit risk funds or high yield FMPs.”

The note ends with him asking for the support of distributors: “looking forward to your support in allaying any concerns which your investors may have.”

Also Read

Small and midcap is the place to be in right now: Nilesh Shah

Nilesh Shah on what govt can do to bring back animal spirits in market

Financials should outperform broader market: Nilesh Shah, Kotak AMC

Investment tips for 2019 by Nilesh Shah and Sunil Subramaniam

Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for Live Elections News & Results, Latest News in Business, Share Market & More.

Other useful Links

Follow us on

Download et app

Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service