Neo Asset Marks First Close Of Second Private Credit Fund At INR 2,000 Cr

Fintech Neo Group’s asset management arm, Neo Asset Management, has marked the first close of its second flagship private credit fund at INR 2,000 Cr. 

Launched three months ago, the Neo Special Credit Opportunities Fund-II (NSCOF II) is targeting a total corpus of INR 5,000 Cr from high-net-worth individuals (HNIs) and multiple family offices.

The fund is a SEBI-registered Category II AIF aimed at providing credit solutions to EBITDA-positive companies. 

Meanwhile, the company claims that all the investments made under the fund are fully covered with at least 2-3 times hard asset collateral and bear regular coupons.

Neo Asset Management, cofounder and CIO Puneet Jain, said that with NSCOF II, the company aims to create a diversified portfolio with 25-30 investments, each ranging between INR 150-300 Cr. 

Neo’s first private credit, Neo Special Credit Opportunities Fund-I, was closed at INR 2,575 Cr in June 2024. It backed 23 investments while making seven exits over the past 18 months. 

“NSCOF-II builds on the foundation of Neo’s first fund, with a continued focus on high-quality credit opportunities and disciplined capital deployment,” said Neo Asset Management’s MD Rubin Chheda. 

Founded by Nitin Jain and Hemant Daga in 2021, Neo Group is a wealth and asset management company. Its India-focused Alternative Asset Management arm, Neo Asset Management, claims to have managed more than INR 10,000 Cr of AUM.

Neo Group counts Peak XV Partners, MUFG Bank and Euclidean Capital among its backers.

This comes at a time when the public listing market is slowing due to a slump in the stock market, creating opportunities for private credit investments.

Other notable players in the asset management segment include Zerodha, Groww, Bajaj Finserv Asset Management, NJ Mutual Fund, WhiteOak Capital Mutual Fund, and Edelweiss Asset Management, among others.

In 2023, Neo announced a $35 Mn (INR 300 Cr) round led by Peak XV Partners. It started off with a $40 Mn seed fund from some external investors and the founding team.

Opportunities In Private Credit Investments

This comes at a time when the public listing market is slowing due to a slump in the stock market, creating opportunities for private credit investments.

As a result, there has been an increase in private credit funds lately. For instance, Kotak Alternate Asset Managers Ltd was reportedly planning to raise $2 Bn for a new private credit fund earlier this month.

While National Investment & Infrastructure Fund (NIIF) in February was reportedly eyeing to raise a $2 Bn private credit fund.

Last year, the world’s largest asset manager, BlackRock, was also reportedly discussing with Jio Financial Services (JFS) for creating a private credit venture.  

As per a PwC report, the Indian private credit market was in the range of $10 Bn in deal size in 2024, while the private credit AUM in India is estimated to be in the range of $ 25 Bn.