I Squared II nears $3.5bn first close

The New York-based firm is expected to finish fundraising by the first quarter of next year.

I Squared Capital’s second infrastructure fund is nearing a first close of approximately $3.5 billion and is expected to finish fundraising by the first quarter of next year, Infrastructure Investor has learned.

The New York-based firm will hold first close in the next few days after finalising legal documents, according to a source with knowledge of the fundraise. At close to $3.5 billion, I Squared Global Infrastructure Fund II is more than halfway to its $5 billion target after launching its fundraise four months ago. The source said a final close could come early next year or sooner.

I Squared declined to comment for this story.

Fund II is a mid-market vehicle focused on brownfield acquisitions in the transportation, utility and renewables sectors.

The fund’s commitments so far include $150 million from Texas Municipal Retirement System, $50 million from New Mexico Educational Retirement Board and $40 million from Rhode Island State Investment Council. The Rhode Island investment council published documents from its August meeting that reports its investment in I Squared’s first infrastructure fund, which closed in 2015, is generating a 15 percent net internal rate of return.

I Squared’s debut infrastructure vehicle closed on $3 billion, drawing more than 45 investors from around the world. That fundraise took 15 months from launch to final close.

I Squared was founded in 2012 by former Morgan Stanley Infrastructure Partners executives to invest in and create platform companies in the power, energy and utilities sectors. Sadek Wahba, previously MSIP’s chief investment officer, is the firm’s managing partner and is joined by Adil Rahmathulla and Gautam Bhandari.

The firm has since established or purchased platforms including Lincoln Clean Energy, its development arm for wind and solar projects in North America; Asia Cube Solar, which invests in ground-mounted and rooftop solar projects; and Cube Hydro, a company that develops and operates small to mid-sized hydroelectric plants.