Neo Group Marks First Close Of INR 2K Cr Secondaries Fund

SUMMARY

A SEBI-registered Category II AIF, the fund will look to back 12-15 startups across six sectors – BFSI, healthcare, consumer, IT, industrials, and services

The secondaries fund is targeting an IRR of 24-27% for its portfolio companies

Neo Asset Management said that the fund has already made investments of INR 50 Cr to 100 Cr in five startups namely Nobel Hygiene, Purplle, Fractal, IDfy and an undisclosed startup

Neo Group’s asset management arm Neo Asset Management has marked the first close of its INR 2,000 Cr secondaries PE fund at INR 750 Cr.

A SEBI-registered Category II AIF, the fund will look to back 12-15 startups across six sectors – BFSI, healthcare/ life-sciences, consumer, IT/ITeS, industrials, and services.

It will write cheques in the range of INR 50 Cr to 250 Cr. The secondaries fund is targeting an internal rate of return (IRR) of 24-27% for its portfolio companies.

In a statement, the asset and wealth management platform said that the Neo Secondaries Fund will back companies that have a positive EBITDA, a significant runway for growth, strong governance practices, growing historical revenues, and a clear path to exit within 24 to 48 months post-investment.

Neo Secondaries Fund has already made investments in five startups so far, including adult diaper manufacturer Nobel Hygiene, beauty and personal care unicorn Purplle, AI-powered analytics unicorn Fractal Analytics, identity verification platform IDfy, and an undisclosed device lifecycle management startup.

Neo Asset Management said that the fund has made investments of INR 50 Cr to 100 Cr in each of these five companies, with the largest allocation going to Fractal Analytics and Nobel Hygiene.

Earlier this month, Inc42 reported that Fractal Analytics raised $170 Mn via a secondary share sale, which involved the offloading of a 6% stake by early backer Apax Partners to a consortium of 22 institutional investors. Neo Asset Management was one of the investors that lapped up the shares.

This comes at a time when the rise of startups IPOs and growing number of exits have resulted in the launch of a number of secondaries-focussed funds.

For instance, in April this year, investment bank IndigoEdge and entrepreneur Hitesh Ahuja launched their maiden secondaries fund, PixelSky Capital, with a target corpus of INR 400 Cr. Prior to that, VC firm White Whale Ventures announced the launch of its secondary fund.