Neo closes $655M second private credit fund, 24% above target
What's the deal? Neo Asset ManagementDealroom has a profile for this one. Try Dealroom → has raised US$842M at the final close of its second private credit strategy, the Neo Special Credit Opportunities Fund-II (NSCOF-II). That beats the firm's US$67.9-crore target by 24% and more than doubles the US$349.7M it raised for its first credit fund in June 2024.
What's the endgame? The fund, a Sebi-registered Category II Alternative Investment Fund, will provide structured financing to established Indian businesses — covering acquisition finance, refinancing, growth capital, and special situations. Neo is targeting 35 to 40 investments, with deal sizes of US$20.4M to US$67.9M and expected gross returns of 21–23%.
The strategy: Neo focuses on collateral-backed lending to businesses with established cash flows, with about 95% of transactions involving operating firms. Its first fund has deployed more than 150% of its corpus across 35 investments, with 17 exits.
Who's backing it? Institutional investors accounted for 22–25% of the new fund, up from 1–2% in the first. Domestic insurance companies form a large part of that pool, alongside commitments from overseas pension funds and family offices.
Why now? Chief executive Hemant Daga said annual private credit opportunities in India are now estimated at nearly US$13.6B, double the level of three years ago, with reported transactions of nearly $7 billion in the first nine months of 2026. He said the raise reflects "growing acceptance of private credit as an important source of capital for Indian businesses."
The signal: Neo's close lands amid a broader pickup in private credit fundraising — Ascertis CreditDealroom has a profile for this one. Try Dealroom →'s fourth fund crossed $700 million in commitments in October. As insurers, pension funds, and development finance institutions increasingly treat private credit as a distinct asset class, the sharp jump in institutional backing suggests the sector is maturing fast. The open question is deployment: raising capital is one thing, putting it to work at target returns is another.
Read more: fortuneindia.com
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