Neo Asset Management Pvt. Ltd has marked the first close of its maiden fund at Rs 625 crore (around $78 million) from domestic high networth individuals (HNIs) and multi-family offices.
The Special Credit Opportunities Fund, launched in June 2022, is a SEBI-approved category-II alternate investment fund (AIF) aiming to raise Rs 800 crore with a green shoe option of Rs 1,200 crore,” Neo Asset Management said in a statement.
The asset management and financial advisory platform of Neo Group was founded by Nitin Jain, former CEO of wealth and asset management, Edelweiss Financial Services, in October last year. Hemant Daga, former CEO of Edelweiss Asset Management later joined as co-founder and CEO of Neo Asset Management in January this year. Both Daga and Jain have over 15 years of stint with the Edelweiss group.
“This is perhaps the largest first close in the private debt markets,” said Jain, founder and chairman of Neo Group, adding that the fund will mark its final close to raise around Rs 2,000 crore (around $250 million) over the next 6-12 months.
“Our basic idea is to launch a series of credit funds which generate meaning yield of 15-20%. This fund will target an IRR (internal rate of return) of 18-20%,” he further said.
Neo Special Credit Opportunities Fund (NSCOF) will invest the private pool of capital towards providing customized credit solutions to Ebitda positive companies that cannot be catered to by traditional channels of financing. The fund will make 15-20 investments across sectors with at least two times tangible hard assets as additional collateral cover for each investment, the company statement said.
The average ticket size per deal will be in the range of Rs 100-200 crore and the asset manager will start closing its deals in the next 30-40 days.
The special situation fund which provide long-term patient capital in the form of working capital loans, acquisition financing, bridge financing, last mile finance, flexible capital and interim financing which can help in balance sheet recovery of Ebitda positive and asset heavy companies.
“These could include distressed assets which do not require a turnaround of companies but helping with capital to manage their balance sheets,” Jain added.
Daga, the co-founder and chief executive officer of Neo Asset Management said, “We are sector agnostic but are bullish on manufacturing, hotel, old economy sectors like steel, cement and other such sectors.”
The Rs 2,000 crore fund will be managed by another co-founder and CIO of Neo Asset Management, Puneet Jain. He has more than 19 years of capital and credit market experience in larger firms include Goldman Sachs, Kotak and Edelweiss Alternative Asset Advisors.
According to the company, private credit markets in India are currently around Rs 50,000 crore annual market opportunity.
“With significant creditor protection rights, private pools of capital have become accessible to companies in special situations that need working capital loans, growth capital, acquisition funding etc. Investors in turn get an opportunity to earn higher, inflation beating risk adjusted returns. Globally some of the world’s largest funds are private credit funds managing more than $100 billion of assets,” the statement said.
Private credit in India is at an inflection point, and we see this asset class evolving significantly similar to global markets, Daga added.
