Data Over Noise: Samir Arora Highlights Helios' IPO Picks Robust Performance After Listing
Arora highlights the nuances in fund managers choosing the right IPO picks amid the currently inflated primary market.
Helios Capital's Samir Arora pushes back against the narrative that initial public offers should be avoided simply because they appear overvalued.
Responding after a recent media report on why fund houses participate in IPOs, Arora says investors often oversimplify the debate. Instead of rejecting IPOs outright, he believes the focus should be on whether fund managers are doing proper due diligence, and not merely trying to build a reputation as "value investors" on social media.
To illustrate, he shared how Helios Mutual Fund approached IPOs this year. Until October 31, the fund participated as an anchor investor in only a select set of IPOs:
The performance of those listings has been strong, with Ather Energy trading at a 105% increase form its IPO price, Jain Resources at 88%, and Urban Company and Travel Foods also trading higher.
The fund attempted to enter two to three additional IPOs, but did not receive allotment, and in one case, Arora suggests that turned out to be a positive.
Arora's take comes amid a frenzy of comments on the state of Indian primary markets, amid sky-high valuations from recent IPOs like Lenskart Solutions.
Veteran investor Shankar Sharma, Founder of GQuant Investech, minced no words while talking about the IPO market, labelling it the "dumbest in the history of IPO markets", driven by "dumb money" from retail investors.
Sharma argued that a "beautiful little game" is being played on small investors using psychological tactics like "anchoring bias." He dismissed the presence of noted anchor investors and pre-IPO marquee names as a strategy to build hype and justify valuations that "cannot be justified at any metric."
"This is all a nice little game of anchoring bias", Sharma said, "If you look at it rationally, the whole point is using anchor books, or using marquee investors pre IPOs, using big names as we have seen in the past, you can get so much in India because there is so much dumb money," he added.
