Expectations for savers in erotic Bollywood bond trading drama

One of the city’s biggest investment firms has bowed to pressure and agreed to back longtime savers who bought the bonds of Bollywood film group Eros Media World.

AXA Investment Management’s move paves the way for the establishment of an action group to protect the interests of investors who bought bonds in good faith but saw prices plummet from £1 to just over 9p.

Eros has delayed or missed interest payments, attempted to restructure its bonds, and was forced to settle a class action lawsuit brought by U.S. shareholders. The company is under investigation by Indian regulators, its UK unit was placed into administration earlier this year and Indian banks took the company to court in London over unpaid debts.

Plucky investment firm 365IM has spent months trying to persuade major institutions such as AXA, Investec and WiseAlpha to join its action group to protect the interests of bondholders. The Marlow-based small company needed investor support for 20 per cent of its £50m bond before it could take action. However, large companies in urban areas did not waver from their stance.

A week ago, 365IM could only represent investors holding 17.5% of the bonds. Then Axa suddenly changed his attitude. The company’s customers own 5.2% of the bond issue, which is 365% above the benchmark.

Immediate action will be taken, starting with a letter to M&G, the trustees of the bond issue. Investors will claim £2.25m in arrears and guarantee that future interest payments will be cleared and £50m repaid by the 2026 deadline.

But there are also concerns that big corporate bias may have hindered the action group’s chances. AXA confirmed that it spoke to 365IM earlier this year. He was also contacted by Investec, but remains on the sidelines. The company’s wealth management division, now part of Rathbones, owns 14 per cent of the outstanding shares on behalf of investors.

Investec Bank, which put the bonds on the market in 2014, also owns the bonds and said it was monitoring the situation closely. Investec’s Wealth Business said it was “working with 365 to review the proposal to determine the best solution for our clients.”

It is known that this year he directly engaged with Eros, but with little apparent effect.