Shares of HDFC Asset Management Company (HDFC AMC) fell over 6 percent on Tuesday after the company took Essel Group exposure on its books. It has offered exits to investors of some fixed-maturity plans (FMPs) impacted by the Essel Group exposure. The company will use shareholder money to repay the investors in full.

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The stock fell as much as 6.6 percent to Rs 1,801 per share on the BSE. At 9:35 AM, the stock was trading 6 percent lower at Rs 1,813 per share as compared to a 0.2 percent gain in the BSE Sensex at 39,020.

The company said that it will provide a liquidity arrangement to certain fixed maturity plan (FMP) schemes of HDFC Mutual Fund to deal with the liquidity crunch owing to their exposure to the non-convertible debentures (NCDs) issued by companies promoted by Essel Group.

"This liquidity arrangement shall only apply in case of FMP schemes (having an exposure to the NCDs issued by the Essel Group Companies) which have either already matured in the month of April 2019 and/ or will mature till the standstill arrangement entered into by the Company with Essel Group Companies is in force," the statement read.

Certain FMPs have exposure to the Non-Convertible Debentures (NCDs) issued by Essel Group-promoted companies Edisons Infrapower & Multiventures and Sprit Infrapower & Multiventures.

The liquidity arrangement may involve an aggregate outlay not more than Rs 500 crore and will be put in place shortly.

"Such liquidity arrangement is in the larger long term interest of the Company and is being undertaken purely as a measure to provide liquidity to the relevant unitholders," the statement added.

According to Morgan Stanley, the liquidity arrangement for Essel should benefit the investors and improve sentiment. However, it added that the new arrangement does pose a financial risk in the event of under-recovery. The brokerage is 'overweight' on the stock, with a target at Rs 2000 per share.

Several AMCs have exposure to Essel Group companies, including in FMPs and open-ended debt funds, and troubles with the promoters of Zee Entertainment Enterprises have rocked the debt markets.

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