Samir Arora to float offshore fund Helios

Samir Arora, the poster boy of Indian mutual funds and former chief investment officer of Alliance Capital Mutual Fund, is set to launch an offshore fund called Helios Capital. Initially, the open-ended equity fund is expected to raise around $300-$500 million from overseas investors.

A source close to Arora told Business Standard, "The fund will be an open-ended equity fund with a long bias." "We are seeing a huge demand for Indian equities from foreign investors and are confident of good collections," the source said without giving further details.

Arora was, however, not available for comments. In August 2003, the Securities and Exchange Board of India had banned Arora from dealing in Indian securities for five years on charges of insider trading and insufficient disclosures.

After a year of trail, Arora was given a clean chit by the Securities Appellate Tribunal as it found no merit in the charges levelled against him. Sebi, subsequently, decided to appeal against the decision in the Supreme Court.

During his stint with Alliance Capital, Arora built a strong franchise for the mutual fund based on his superlative performance in equity funds. Alliance Capital has now decided to exit India having signed a deal to sell its operations to Birla SunLife Mutual Fund, subject to certain legal clearances.

Of late, several Indian fund managers have been joining hedge funds or private equity investors.

While higher pay is attracting them to the sector, a fund manager at a hedge fund told Business Standard: "Things at hedge funds are not as rosy as they look from the outside. The Indian markets are in a structural bull phase. So it is easy to make money. The challenge will come when the markets are declining. We will have to protect the assets of investors and also give them decent returns."

Hedge funds typically charge around 2 per cent of the assets under management as professional fees and a minimum 20 per cent share of the profits.