Neo raises ₹6,200 crore for second credit fund; targets 35-40 investments

Neo Alternative Asset Managers (NAAM), the alternative asset management arm of Neo Wealth and Asset Management, has raised ₹6,200 crore at the final close of its second special credit opportunities strategy, exceeding its initial target of ₹5,000 crore by 24%. The capital will be deployed to provide structured and flexible financing solutions to established Indian businesses.

The fundraise marks an expansion of Neo’s private credit business, following the closure of its maiden strategy, Neo Special Credit Opportunities Fund-I (NSCOF-I), in June 2024, with commitments of ₹2,575 crore, the company said in a release.

The second strategy includes Neo Special Credit Opportunities Fund-II (NSCOF-II), a Securities and Exchange Board of India (Sebi)-registered Category II Alternative Investment Fund (AIF). It will focus on structured financing for established Indian businesses, including acquisition finance, refinancing, growth capital and special situations where conventional lending structures may not adequately address funding requirements.

The investment strategy prioritises businesses with established operating cash flows and uses structured transactions, collateral-backed security and prudent leverage to manage downside risks while targeting regular income and risk-adjusted returns. The fund has attracted participation from family offices and institutional investors.

Fund targets 35-40 investments

Puneet Jain, Co-Founder and CIO of NAAM, said the fund would focus on deploying capital judiciously and building a diversified portfolio of approximately 35-40 investments, with individual deal sizes generally ranging from ₹150 crore to ₹500 crore.

“As we move forward with NSCOF-II, our priority is to deploy capital judiciously and build a well-diversified portfolio of approximately 35–40 investments, with individual deal sizes generally ranging from ₹150–500 crore,” he said.

He added that the investment framework would continue to prioritise disciplined underwriting, transaction structuring and adequate collateral cover.

Rubin Chheda, MD and Head – Special Situations Credit, NAAM, said India’s mid-market special situations credit segment offered a significant opportunity to finance businesses seeking capital beyond conventional lending channels. The fund would maintain its focus on rigorous underwriting and downside protection, he added.

The second strategy builds on the deployment and exit track record of Neo’s maiden private credit fund. Since its inception, NSCOF-I has recorded gross deployment exceeding 150% of its fund corpus, completed 35 investments and achieved 17 exits.

Commenting on the fund closure, Hemant Daga, Co-Founder and CEO of NAAM, said the fundraise reflected growing acceptance of private credit as an important source of capital for Indian businesses and investor confidence in the firm’s ability to manage capital.

Founded in 2021, Neo Wealth and Asset Management manages approximately ₹1.40 lakh crore in total client assets across assets under advice and management. The platform operates across 17 cities in India and two international locations.

NAAM manages more than ₹31,000 crore across four strategies spanning private equity, private credit and real assets, including infrastructure and real estate. The platform has a team of over 100 professionals, including more than 65 investment specialists.