Neo Group Dives into Real Estate with Rs 1,500 Crore Fund

MUFG and Peak XV-backed asset and wealth management platform Neo Group is making a significant move into the real estate sector. The company is preparing to launch its first real estate fund over the next few months, with an initial target size of around Rs 1,500 crore. The final size of the fund is still under discussion, but the company is confident in its potential to attract substantial investments.

The focus of the fund will primarily be on residential real estate. According to a source, the fund managers believe that capital in the sector is still under-deployed, both at the land buying and construction stages. Despite market uncertainty, alternative investments remain attractive to investors due to the presence of experienced fund managers, quicker exits, and strong rates of return.

The fund will be managed by Neo Alternative Asset Managers, the investments arm of the Neo Group. Recently, the company bolstered its real estate team by hiring the leadership team from WSB Partners, formerly Walton Street India. Managing directors Kaushik Desai, Vinit Prabhugaonkar, and Vimal Jangia, who have worked at WSB for 17 years and advised on around $650 million in deals, are expected to bring valuable expertise to the new fund.

The first fund will largely be backed by domestic sources, including high and ultra-high net worth individuals, family offices, and corporate treasuries. Additionally, the fund managers plan to establish a feeder fund in GIFT City to attract investments from overseas entities and non-resident Indians in a tax-efficient manner.

In a statement to Moneycontrol, Neo Group confirmed that the fund size is expected to be in the Rs 1,500 crore to Rs 2,000 crore range, though further details are not yet available. The entry of private credit funds into the real estate sector has become increasingly important as banks have largely retreated from financing approvals and construction.

Real estate private credit funds typically aim for returns of 15-20 percent, with the capital used for acquiring land, obtaining regulatory approvals, or funding construction. In some cases, private credit players take on the role of lenders to drive projects to completion, leveraging their expertise or bringing in other developers.

A recent report from EY indicates that of the $3.4 billion deployed through private credit in the July-December 2025 period, 42 percent was invested in real estate, the highest among all sectors. An analysis of major real estate private credit deals, deployed by players such as 360 ONE, EAAA Alternatives, Motilal Oswal, and Sundaram Alternates, shows internal returns of around 18 percent.

While the initial focus for Neo Group's real estate play is expected to be in housing, the company may also consider raising equity-led funds for ownership in real estate assets, particularly in the industrials and logistics segment. This sector has seen extensive deployment of institutional capital, driven by rising demand for logistics and e-commerce.

Neo Group has been aggressively expanding its presence in the asset and wealth management sectors. Since its inception in 2021, the firm has secured backing from investors beyond MUFG and Peak XV, including Euclidean Capital and a recent round from TVS Capital, valuing Neo Group at around $1 billion. The company currently oversees more than Rs 1 lakh crore worth of assets, positioning it as a significant player in the Indian financial landscape.

The launch of the real estate fund is a strategic move that aligns with Neo Group's broader vision of diversifying its investment portfolio and capitalizing on opportunities in the rapidly evolving real estate market.