Neo Asset Management has successfully closed its first Special Credit Opportunities Fund, raising ₹2,575 crore from high-net-worth individuals and family offices. The fund is dedicated to investing in non-triple-A-rated companies that are generating operating profits, aiming to deliver a gross internal rate of return (IRR) of 22-24% for its investors.
The fund’s strategy focuses on providing credit solutions to Ebitda-positive companies. Over the 15-month fundraising period, Neo Asset made 12 investments and achieved two exits, both generating an IRR of over 23%. All investments are fully collateralized, and supported by operating cash flows.
In the coming year, the fund plans to make an additional 8-10 investments. Beyond the Special Credit Opportunities Fund, Neo Asset Management offers a range of credit solutions, including a performing credit fund, core fixed-income solutions, and an infrastructure income fund. These products cater to various credit needs across different yield curves, time horizons, and risk tolerances.
Recently, Neo Asset launched a ₹700 crore performing credit fund and has raised ₹1,300 crore in its infrastructure strategy within seven months, with plans to close at ₹2,000 crore. The core fixed-income fund solutions feature two strategies, yield enhancer and treasury plus, which together have raised ₹1,700 crore. These initiatives aim to generate alpha for clients in the short term.
Hemant Daga, CEO of Neo Asset Management, highlighted the growing demand for private credit in India, estimated at ₹1 lakh crore annually. “We aim to cater to clients’ regular income needs, offering credit solutions with returns ranging from 12% to 24%. Our goal is to create a Neo alternative yield curve, allowing clients to choose options based on their specific needs while adding efficiency to the process,” Daga stated.
Neo Asset’s investment portfolio includes refinancing, one-time settlements, bridge-to-equity, growth capital, and working capital. In the infrastructure sector, Neo acquires fully functional assets post-completion, collaborating with counterparties like NHAI and SECI.
Globally, the private credit asset class is expanding at a rate of 15-18% per annum. In India, it is recognized for its superior risk-adjusted returns and significant downside protection. Nitin Jain, founder and chairman of Neo Wealth and Asset Management, emphasized the pivotal role of private credit in supporting India’s economic growth. “As India progresses towards becoming the world’s third-largest economy, private credit will play a crucial role in meeting the industry’s patient and flexible capital requirements,” Jain remarked. “With robust credit protection rights, private pools of capital are essential in providing patient and flexible capital to small and mid-sized companies for growth opportunities, refinancing situations, bridge-to-equity events, and more.”
This latest fundraiser positions Neo Asset Management as a key player in India’s burgeoning private credit market, offering tailored credit solutions to meet the diverse needs of its clientele.
