A long queue has formed before the capital market regulator to set up mutual funds even as investors make a beeline to the exit door in current funds.

Singapore-based Samir Arora’s Helios Capital Management and Rakesh Jhunjhunwala’s Alchemy Capital are the latest to apply to the Securities and Exchange Board of India (Sebi) for mutual fund licences.

Helios Capital Management has applied for the licence on February 25, while Alchemy Capital Management applied earlier on January 1.

Singapore-based Helios Capital Management was formed by Arora in 2005. Helios runs a global long-only equity fund with an India focussed mandate.

Helios Singapore holds a capital markets services licence of the Monetary Authority of Singapore and is registered as a foreign portfolio investor (FPI) with Sebi.

Alchemy’s founders include Jhunjhunwala, Hiren Ved, Lashit Sanghvi and Ashwin Kedia. It offers portfolio management services (PMS) and alternate investment products.

These are not the only two who are waiting for approvals for their applications. The other aspirants include

Bajaj Finserv, Capitalmind, Frontline Capital Services, Unifi Capital Pvt and Zerodha Broking Ltd. Samco Securities has already won Sebi’s in-principle approval.

In a recent report, analysts at ICICI Securities had said that mutual fund penetration ratio — which is the ratio of assets under management to gross domestic product — is significantly lower in India at 11 per cent compared with the global average of 55 per cent, which leaves enough opportunity for growth.

The report said there was a lack of participation beyond the top 30 cities, which could be because of low financial literacy and a cultural attitude towards savings in physical assets, gold and bank FDs.

The analysts at ICICI said various segments of the mutual funds industry such as equity, debt, liquid and others, including ETFs, will see better returns.

For instance, the share of equity funds to nominal gross domestic product was expected to rise to 0.7 per cent of GDP in another 10 years from 0.5 per cent now.

The brokerage has forecast that the assets under management of India’s mutual fund industry will increase to Rs 100 lakh crore over the next nine years even as the trend of financialisation of savings continues.
In February, equity mutual funds witnessed net outflow of Rs 4,534 crore in the eighth consecutive month of outflow.