Infrastructure Leasing & Financial Services Ltd., the unlisted parent to a group of companies in various infrastructure verticals, lost its investment grade rating after ICRA downgraded its debt by several notches in one go.
Here are the asset management companies with exposure to IL&FS and its subsidiaries:
DHFL Pramerica which had an exposure of Rs 25 crore, exited the investment in July, the asset manager said in a statement to BloombergQuint. UTI Mutual Fund, in its response, said it doesn’t have any direct investment in IL&FS, but had an exposure of Rs 37.5 crore in the group subsidiary ITNL Ltd.
Aditya Birla Sun Life has exposure to three IL&FS group projects—Tamil Nadu power plant, education special purpose vehicle in three states and a road project in Jharkhand, the fund house said in a statement, adding that its receivables are secured against cash flows. Moreover, the Jharkhand asset has a secured annuity income from the state government and should not be treated as a direct exposure to IL&FS, it said.
Other funds are yet to respond to BloombergQuint’s emailed queries.
According to SEBI norms, if rating of an investment falls below the investment grade, ie: below BBB, then fund houses are supposed to take a 25-percent mark-down on the value of the investment.
Mutual funds have a limited exposure to IL&FS group of around Rs 3,500 crore, so no individual fund will be hurt very badly, Dhirendra Kumar, founder and chief executive officer of Value Research, told BloombergQuint over the phone.
The problem is that mutual funds always suffer for a very different reason. They suffer because of stampede as investors start withdrawing, and that causes greater disruption and dislocation.Dhirendra Kumar, Founder and CEO, Value Research
The breakup of individual fund houses’ exposure to IL&FS group:
*Updated to reflect the current exposure of Asset Managers.
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