The continuing boardroom battle at the Tatas has brought mutual funds into a huddle, given their over Rs 20,000 crore investment in shares of listed companies of the conglomerate as also the huge amount of money parked by Tata firms in various debt and equity funds.
To safeguard the investors’ interest, the fund houses are keeping a close watch on the developments and are looking to take a collective call on the resolutions to be moved at shareholder meetings of various listed Tata firms.
The main promoter entity Tata Sons has already proposed extra-ordinary general meeting of shareholders at some firms to seek ouster of Cyrus Mistry from their respective boards. Mistry was removed as Tata Sons chairman last month while his predecessor Ratan Tata was called back as the interim head, triggering a major boardroom battle in the group with a flurry of allegations and counter-allegations from the two sides.
Mutual funds, which have an exposure of over Rs 20,000 crore in shares of various Tata companies, are keeping track of the developments and are being wooed by both the camps for support, top fund managers said. Foreign portfolio investors, who are also heavily invested in Tata shares, are also closely monitoring the moves and have approached the markets regulator Sebi, independent directors and management of respective companies to ensure the minority investors’ interest is safeguarded.
The foreign and domestic institutional investors are worried about the plunge in share valuations after Mistry’s abrupt ouster from Tata Sons and the subsequent boardroom battles at the group’s various listed companies. The board members of some companies have already appeared to be divided.
Regarding mutual funds, a committee headed by chief of a leading private fund house is monitoring the developments related to the Tata-Mistry saga, sources said. The committee comprises 19 members, including chief investment officers of various fund houses.
Given the sensitivity of the matter, none of the fund managers agreed to be named, but said they are still convinced about long-term returns from Tata stocks, but want to be assured that the short-term volatility gets contained. Some are also concerned about any possible redemption pressure by Tata group companies regarding their huge investments in various debt and equity schemes of various fund houses.
The fund houses with significant exposure to various Tata stocks include ICICI Prudential MF, Reliance MF, SBI MF, HDFC MF and Franklin Templeton MF. In the past two weeks, Tata Group firms have witnessed a combined market capitalisation erosion of around Rs 50,000 crore.
“The exposure of fund mangers is scattered across several sectors that recent drop in stocks of Tata Group firms will not have any major impact on their investments in longer term,” chief investment officer of a mutual fund house said. The fund houses, as also other institutional investors, want an early resolution of the spat between the two warring camps — the Tatas and the Mistrys.
State-owned LIC, which is also invested heavily in various Tata companies, as also various public and private sector insurers as well as the banks are also keeping a close tab on the developments, given their significant exposure to the group.
Mistry’s family firm, Shapoorji Pallonji, is a construction major and a major individual shareholder in Tata firms with its over 18 per cent stake in Tata Sons, one of the main holding companies for various firms of the group. However, Tatas-controlled Trusts have over two-third stake in Tata Sons. Both the factions are trying to rally support of various institutional investors.