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I Squared invests in US midstream company

The investment comes from the New York-based firm’s second $5bn fund, which is nearing a $3.5bn first close.

I Squared Capital has acquired a Houston-based midstream company from BP Energy Partners through its second fund, which is currently being raised.

The New York-based fund manager purchased Pinnacle, which operates crude oil and natural gas gathering and processing assets in the Delaware portion of the Permian Basin, in west Texas. Transaction details were not disclosed and the deal is subject to regulatory approval, a statement said.

I Squared said it invested through its Global Infrastructure Fund II, which is nearing a $3.5 billion first close. The fund is targeting $5 billion and a final close early next year.

Pinnacle joins a roster of platform companies I Squared has added to its portfolio since it was founded in 2012. It also manages 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.

US midstream has been one of the hottest infrastructure sectors this year, with billions of dollars invested in pipelines, gathering systems and storage terminals, primarily in Texas. Some of the largest deals include Global Infrastructure Partners’ $1.82 billion purchase of Medallion Gathering and Processing earlier this month and SemGroup’s $2.1 billion acquisition of Houston Fuel Oil Terminal Company in June.

I Squared was founded 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, alongside MSIP alumni Adil Rahmathulla and Gautam Bhandari.

The firm did not reply to a request for comment for this story.