Why Samir Arora wants mutual funds to stay away from IPOs, QIPs for 30 days; seeks more anchor investor disclosures

Helios Capital's Samir Arora has suggested that Indian mutual funds stop participating in initial public offerings (IPOs), qualified institutional placements (QIPs) and other placements for 30 days, according to a CNBC-TV18 report.

The report said Arora suggested that mutual fund houses could come together, similar to the Association of Mutual Funds in India (AMFI), and agree not to participate in new issues for a fixed period.

"I think the big negative now on which the mutual fund players should form another association like AMFI is to say that we will boycott, without any specifics, we will boycott every IPO, every QIP, every placement for 30 days," Arora told CNBC-TV18.

"We will see the performance of our market, then for 30 days you can sell, then again we will stop for 30 days, or some such thing," he added.

The report said Arora believes the pressure on Indian equities is not mainly due to foreign investor selling, noting that foreign investors had been net buyers over the previous two months.

Instead, he pointed to the large number of new issuances coming to the market. Arora said some of these issues were being handled by investment bankers who, in his view, were less careful.

The report further stated that Arora compared the situation with 1999 and 2007, when he said a flood of new issues had weighed on the market.

Arora said his proposed pause should be applied broadly rather than selectively. "Let five fail," he said, arguing that it should not matter whether individual issues were good or bad.

The report added that Helios Capital currently takes anchor allocations in only around seven to eight IPOs a year.

Despite his concerns over new issuances, Arora struck a more positive note on the broader market, pointing to four changes over the previous three to four months.

The report said he noted that the US tariff rate had come down to 10 per cent from as high as 50 per cent. He also pointed to the rupee remaining largely flat against regional currencies for two months, which he linked to FCNR-related inflows.

The report further stated that Arora believes concerns over India missing out on AI opportunities have eased, noting that AI-linked stocks such as Google, Amazon and Meta, along with semiconductor companies, had not been performing strongly.

On earnings, Arora said growth had improved from around 7-8 per cent over the previous year or two to about 18-20 per cent overall. The report added that he put mid-cap earnings growth at around 20 per cent and small-cap earnings growth at around 30 per cent.

Calls for more disclosure on anchor investors

Additionally, the market veteran, responding to a post on X (formerly Twitter) about anchor investing, called for more disclosure on anchor investors. He wrote: "Just like we have disclosure on how previous IPO offerings of lead managers did over past 3 yrs, we should have disclosures on how many IPOs did the investor anchor over past 3 yrs and how many were held for 6 months and 1 year post listing."