Helios Capital has no IPO plans, says CEO Dinshaw Irani

The comments come as the mutual fund industry continues to see continued growth, with a series of asset management companies (AMCs) going or planning to go public, cashing in on the positive primary market sentiment. India has created a unique combination called the JAM Trinity: Jan Dhan, Aadhaar and Mobile, said Irani. "Jan Dhan has provided banking access to most Indians, Aadhaar has enabled digital identification, and mobile connectivity has brought millions online," he said.

This has created enormous potential for digital businesses. When evaluating these companies, Helios tends to focus on their long-term growth potential. "We don't get carried away by valuations or get bogged down by valuations rather," he added. Instead, the question is whether the growth prospects justify the price. As a result of the belief in new-age companies that are focused on disruption, Helios is planning  a disruption-themed fund.

"I think ours is the first fund under disruption theme, we are that convinced on this particular theme," Irani said. According to Irani, disruption is anything that changes an established industry: Artificial intelligence is disrupting the IT industry, electric vehicles are transforming the automobile sector, and quick commerce is challenging traditional kirana stores and conventional e-commerce businesses.

Helios' funds have seen some disproportionate performances. The funds that have done well consistently rank in the upper quartiles, but a few funds have languished at the bottom quartile. "The two funds which we are trying to work on are financial services fund and the balanced-advantage fund (BAF)," Irani said. "On the BAF, we were clear that we were not debt guys, and we would do arbitrage instead.

However, arbitrage rates crashed to 4-5% and to rub it in, debt started repricing as yields came down. So now we are trying to work our way around this." On the financial services fund, Irani stated that Helios remained true to the ethos of the fund. "You will not find a single non-financed stock in my financial services fund," he said, "unlike some other funds." The fund has performed in-line with the index as some names have seen some drawdown, he added.

Helios Capital has been featured in several IPO anchor books, as the buck for price discovery in public issues passes to domestic mutual funds from foreign institutional investors. As a result, he said, "Whenever the mutual funds have decided the valuation, they've been very stringent about it." As a result, investors should pay attention to anchor books before investing, Irani added, because when established domestic mutual funds participate, their decision reflects serious negotiation over the issue price.

For Helios' investments in issuers' anchor books, the investment approach is extremely selective, with companies evaluated on growth prospects, management quality, corporate governance as well as valuations. The fund house's approach, he said, is not to participate in every opportunity but to invest when the underlying business and its valuation meet its criteria.