Liquidity woes plaguing Altico Capital pose new risks for MF investors

In an exchange note, Altico said it may have trouble making future repayments

Liquidity issues plaguing Altico Capital — a private equity (PE)-backed developer financier — may add to concerns of debt mutual fund (MF) investors. According to data from Value Research, Reliance Nippon Life AMC (RNam) and UTI MF had Rs 537 crore of debt exposure to the company, as of August-end. 

According to industry sources, investors may see mark-to-market (MTM) impact once valuation agencies revise the security’s pricing to factor in the firm’s default on interest payment of Rs 19.9 crore. This payment was related to an external commercial borrowing. 

On Friday, UTI MF said it would use the side-pocket mechanism to create