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Hedge Fund Garners $11 Mln for Buying India’s ‘Slumdog’ Stocks

An India-focussed hedge fund, which owes its name to this year’s Oscar winner for the best song, has garnered $11 million for buying Indian stocks which are ‘slumdogs’, but with potential to become ‘millionaires’.

The money has been raised by ‘Helios India Jai Ho Fund’ named after the theme song of the movie ‘Slumdog Millionaire’ that scooped eight Academy Awards this year— and would be invested in the stocks that are like slumdogs of the market, but could gain significant value over time.

The fund, launched by Singapore-based Helios Capital Management, seeks to replicate the storyline of worldwide box office hit, wherein the protagonist rises from Mumbai slums to become a millionaire after winning a television quiz show.

According to a regulatory filing with the US Securities and Exchange Commission, the fund has already raised $11 million from 14 investors and plans to tap more investors. As per the filing, the minimum investment expected from an investor is 100,000 dollars and the offering is expected to last for more than one year.

However, the capital raised so far is well below the targeted $50 million by the end of July. The fund is aiming to tap investors in the US, Europe and the Middle East.

The managers of the fund are looking to invest in “Indian stocks that have recently got ‘Beaten Up and Cheap’ with strong long-term growth prospects”. The fund is not charging any performance fee for the first three years.

Helios Capital was founded by Samir Arora, a fund manager and former Chief Investment Officer at Alliance Capital Mutual Fund, along with some of other Alliance Capital executives.

Arora, who had been associated with Alliance Capital ever since its foray into Indian MF market in 1995, had become a sort of poster boy of Indian mutual fund industry.

He resigned from Alliance in August 2003 to join mutual fund business of former Standard Chartered banker Rana Talwar-headed SabreCapital. Around the same time, market regulator SEBI barred Arora from dealing in the market for five years on charges including conflict of interest.

This charge was related to Arora making a bid along with Henderson Global Investors for buying the fund house.

In its order, SEBI said that when Alliance Capital planned to sell its stake in the asset management company, Arora tried to thwart the bidders to favour Henderson Global Investors and Henderson buying the fund would have resulted in a personal gain of nearly Rs 30 crore to Arora. However, the Securities Appellate Tribunal exonerated Arora of all charges, as it found nothing wrong with a fund manager making an offer to buy a fund. The fund house was sold to Birla Sun Life MF in late 2004.

Source: India Journal

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