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I Squared makes first China investment

The global infrastructure fund manager has bought a majority stake in Jiansu Province Jiaqing Water Services through its ISQ Global Infrastructure Fund.

US-based I Squared Capital (ISQ) has purchased a majority stake in Jiangsu Province Jiaqing Water Services in China, making its first foray into the infrastructure sector in the world’s second-largest economy.

The deal taps growing demand for urban infrastructure, such as waste water treatment, in China as the country undergoes urbanisation and industrialisation.

The investment is being made through its ISQ Global Infrastructure Fund, and follows investments in district energy and hydropower in the US.

Halcyon Capital, an existing shareholder of Jiaqing Water, is investing additional capital along with I Squared. Halcyon Capital is one of the private equity funds managed by Hainan Airport Group, one of the largest infrastructure groups in China.

“This investment will enable Jiaqing Water to expand existing facilities and grow into new cities with robust economic fundamentals and increasing demand for environmentally-friendly waste water treatment,” ISQ managing director James Chern said in a statement.

Jiaqing Water currently operates five waste water treatment plants and is building three more to serve cities with a total population of 12.9 million in the provinces of Henan, Guangxi, and Heilongjiang, the statement said.

Its combined daily treatment capacity is projected to exceed 165,000 metric tons by 2015, it added.

“We are excited to partner with I Squared Capital to leverage their global operating network, particularly in the waste water sector. China is focusing on improving environmental standards and protecting water resources to maintain sustainable economic growth,” Jiaqing Water’s chairman, Jiamei Lin, said in the statement.