Description

ICICI Prudential CRISIL-IBX AAA Bond Financial Services Index - Dec 2026 Fund will merge with ICICI Prudential Corporate Bond Fund effective November 14, 2025, following SEBI approval.

Summary

ICICI Prudential Asset Management Company Limited has announced the merger of ICICI Prudential CRISIL-IBX AAA Bond Financial Services Index - Dec 2026 Fund (Merging Scheme) with ICICI Prudential Corporate Bond Fund (Surviving Scheme). The merger was approved by the Board of Directors of ICICI Prudential Asset Management Company Limited on June 26, 2025, and by ICICI Prudential Trust Limited on June 24, 2025. SEBI granted no-objection on September 26, 2025. The merger will be effective from the end of business hours on November 14, 2025.

Key Points

  • Merging Scheme: ICICI Prudential CRISIL-IBX AAA Bond Financial Services Index - Dec 2026 Fund
  • Surviving Scheme: ICICI Prudential Corporate Bond Fund
  • Record Date: October 08, 2025
  • Effective Date: November 14, 2025 (end of business hours)
  • SEBI no-objection received on September 26, 2025
  • Merger is treated as change in fundamental attributes under Regulation 18(15A) of SEBI (Mutual Funds) Regulations, 1996
  • No change in fundamental attributes of the Surviving Scheme
  • Merging Scheme will cease to exist post-merger

Regulatory Changes

The merger complies with Regulation 18(15A) of the SEBI (Mutual Funds) Regulations, 1996, which governs changes to fundamental attributes of mutual fund schemes. The procedure requires SEBI approval and unitholder notification, both of which have been completed.

Compliance Requirements

  • Unit holders of the Merging Scheme should review the notice dated September 26, 2025, published on the AMC’s website
  • Unit holders must be aware that this merger is considered akin to a change in fundamental attributes
  • The merger follows the prescribed regulatory procedure under MF Regulations

Important Dates

  • June 24, 2025: ICICI Prudential Trust Limited Board approval
  • June 26, 2025: ICICI Prudential Asset Management Company Limited Board approval
  • September 26, 2025: SEBI no-objection communication received
  • October 08, 2025: Record Date
  • November 14, 2025: Merger becomes effective (end of business hours)

Impact Assessment

Rationale for Merger:

The merger is driven by market conditions and declining scheme viability:

  1. Interest Rate Environment: RBI implemented significant monetary policy changes in 2025:

    • February 2025: Substantial liquidity injection and enhanced bond purchases to address interbank cash shortages
    • Rate cuts totaling 100 basis points: 25 bps in February, 25 bps in April, and 50 bps in June 2025
    • These measures pushed bond yields lower

  2. Impact on Merging Scheme:

    • Change in interest rate cycle reduced investor interest in Debt Index Funds
    • Sustained redemptions led to continuous outflows and declining AUM
    • Lower AUM makes it challenging to replicate the underlying index in accordance with regulatory guidelines
    • Difficulty in maintaining tracking difference requirements

  3. Scheme Characteristics:

    • Merging Scheme: Open-ended target maturity index fund investing >95% in AAA rated bonds of Financial Services Companies maturing on or before December 2026
    • Surviving Scheme: Has flexibility to invest across various debt and money market instruments including bonds and debentures

Impact on Unitholders:

  • Unitholders of the Merging Scheme will become unitholders of the Surviving Scheme
  • The Surviving Scheme offers broader investment flexibility compared to the target maturity index fund
  • No change in fundamental attributes of the Surviving Scheme, so existing unitholders of the Surviving Scheme are not adversely affected

Impact Justification

Affects unitholders of ICICI Prudential debt funds. Merger is driven by declining AUM and redemptions in the merging scheme following RBI rate cuts and liquidity injections. No change to surviving scheme fundamental attributes.