NEO Infra Income Fund

Fund Snapshot

Fund Overview

The Neo Infrastructure Income Opportunities Fund, managed by Neo Asset Management, is designed to capitalize on India’s burgeoning infrastructure sector, which is expected to see INR 8 lakh crore of equity capital invested over the next five years. The fund focuses on delivering long-term capital growth with minimal risk through a strategic approach that includes minimal investment risk as a counterparty to the government, steady cash flows from operating assets, regular distributions, inflation-protected returns, and investments in sectors with established regulations and historical success.

The fund has a proven track record, having facilitated successful exits for global investors such as KKR and Actis. Notable exits include KKR’s investments in Virescent Infrastructure (Renewables) for INR 1,500 crore between 2020 and 2023, yielding a 30% IRR, and Highway Concessions One (Roads) for INR 1,700 crore from 2014 to 2022 with a 20% IRR. Actis exited its investments in Ostro Energy (Renewables) for INR 2,500 crore between 2014 and 2018, achieving a 22% IRR, and in Sprng Energy (Renewables) for INR 4,150 crore from 2017 to 2022 with a 20% IRR. Additionally, Global Infrastructure Partners exited Vector Green Energy (Renewables) for INR 2,000 crore between 2016 and 2023, securing an 18% IRR.

The Neo Infrastructure Income Opportunities Fund captures India’s infrastructure potential through a diversified strategy, with 20–25% of its portfolio allocated to privately listed assets and 75–80% to the acquisition and aggregation of operating assets. The fund diversifies across 10–12 investments, focusing on the infrastructure sub-sectors of roads and renewables. It offers investors a compelling return profile, targeting an IRR of 18–20% with semi-annually distributed coupons ranging from 9–10%. This combination of diversification, focus on stable sectors, and attractive returns positions the fund as a strong opportunity for investors seeking exposure to India’s infrastructure growth.

Investment Philosophy

Neo Asset Management’s investment philosophy centers on delivering sustainable, long-term value to investors by capitalizing on high-growth opportunities in India’s infrastructure sector while emphasizing stability and risk mitigation. The firm believes in the power of disciplined, strategic investing to generate consistent returns, and its approach is guided by the following core principles:

1. Focus on Resilient, High-Potential Sectors: Neo Asset Management targets infrastructure sub-sectors such as roads and renewables, which benefit from established regulations, historical success, and strong government support. These sectors provide predictable cash flows and inflation-protected returns, ensuring resilience against market volatility.
2. Minimal Risk through Strategic Counterparty Selection: By positioning the government as its primary counterparty, Neo Asset Management minimizes investment risk, leveraging the stability and reliability of public-sector partnerships to safeguard investor capital.
3. Diversification for Stability and Growth: The firm maintains a diversified portfolio, allocating 20–25% to privately listed assets and 75–80% to the acquisition and aggregation of operating assets. By spreading investments across 10–12 opportunities, Neo Asset Management balances risk while capturing growth in India’s infrastructure landscape.
4. Commitment to Regular Income and Attractive Returns: Neo Asset Management prioritizes steady cash flows and regular distributions, offering semi-annual coupons of 9–10% alongside a target IRR of 18–20%. This dual focus ensures both income generation and capital appreciation for investors.
5. Proven Expertise and Track Record: Led by a team with over 19 years of experience in capital markets and financial services, Neo Asset Management draws on its deep industry knowledge and a history of successful exits—such as those with KKR, Actis, and Global Infrastructure Partners—to drive value creation and deliver results.

The firm’s philosophy is rooted in the belief that infrastructure in India, with its projected INR 8 lakh crore equity capital influx over the next five years, presents a unique opportunity for investors. By combining rigorous due diligence, a focus on operating assets, and a commitment to sustainable growth, Neo Asset Management seeks to unlock this potential while ensuring financial security and superior returns for its stakeholders.

Neo Edge: A Competitive Advantage in Infrastructure Investing

Neo Asset Management demonstrates a distinct competitive edge through its Neo Infrastructure Income Opportunities Fund, underpinned by three key pillars: cost efficiency, exit experience, and deal-sourcing capabilities.

• Cost Efficiency: The fund offers significant cost savings, with an annual expense of INR 2–2.5 lakhs per annum, translating to overall savings of INR 14–18 lakhs over its tenure. This cost-effective structure enhances investor returns by minimizing overheads.
• Exit Experience: The investing team at Neo Asset Management brings proven expertise, having played a pivotal role in four successful large exits out of the last six in India. This track record underscores the firm’s ability to deliver strong returns through strategic exits, as evidenced by past successes with investors like KKR, Actis, and Global Infrastructure Partners.
• Deal-Sourcing Competition: With a target deployment of INR 2,000 crore, the fund operates in a space with limited competition for deals ranging from INR 150–200 crore. Unlike larger global funds and InvITs that focus on bigger assets, Neo Asset Management’s focused approach allows it to efficiently source and secure high-potential opportunities in India’s infrastructure sector.

Through its cost-effective operations, deep exit experience, and strategic deal-sourcing capabilities, Neo Asset Management positions itself as a leader in delivering value to investors in the infrastructure investment landscape.