Mumbai-based Neo Alternative Asset Managers is set to acquire three road projects as it deploys capital from its second infrastructure fund, two sources familiar with the matter told Infralogic.

The sources declined to identify the assets or seller, citing confidentiality at this stage of discussions.

The asset manager is likely to invest around USD 100m through Neo Infra Income Opportunities Fund II, one of the sources said.

Following the acquisition, Neo will sign an agreement to evaluate at least three more road projects, the source said without providing more details.

These are all hybrid annuity contracts, in which the National Highways Authority of India (NHAI) covers 40% of the cost and the developer funds the rest with debt and equity. It is repaid its investment with interest through semi-annual payments over a 15-year period, with NHAI assuming traffic risk.

The alternatives asset management arm of Neo Group is in the midst of capital raising for its second fund, targeting a final corpus of about USD 500m. It has raised about USD 250m so far and expects to get to final close in about six to nine months, earlier than an initial timeline of March-June 2027, one of the sources said.

The fund manager currently has eight road assets – five acquired from HG Infra Engineering – two from CDS Infra Projects, and one from Jaiprakash Associates.

Renewables focus

While 80% of the funds will be deployed in the roads sector, it will target segments including standalone battery storage systems (BESS) with contracted offtake as well as solar farms that have credible government counterparties, the sources said.

Neo will wait to see a few operating BESS examples before it commits any capital, and even then, will only target top quality batteries with dependable warranties, one of the sources said.

The second infra fund is targeting offshore investors for the first time and has been meeting limited partners around the Asia Pacific.

About 80% of its LPs from its first fund, which raised entirely domestic capital, have committed again to the second edition. The remaining 20% will be foreign LPs.

Neo has over INR 250bn (USD 2.6bn) of assets under management, focusing on private equity, private credit, infrastructure and real estate. The infra funds business employs about 50 people, investing in operational, revenue-generating assets backed by long-term contracted cash flows from creditworthy government counterparties.

Neo did not respond to a request for comment.