I Squared’s Cube Hydro in $140m private placement

Cube Hydro Partners, one of the North American hydro platforms of New York-based fund manager I Squared Capital, has closed on a $140 million private placement of 10-year senior secured notes.

The investment grade notes are paying a 4.75 percent semi-annual coupon in April and October, starting next April. The proceeds will be partly used to retire equity, given Cube Hydro’s portfolio had been 100 percent equity financed, as well as to fund business requirements and strengthen its financial structure.

Former US Undersecretary of Energy and Cube Hydro chief executive Kristina Johnson said in a statement the issue “exceeded our expectations” and shows the company’s ability to support clean energy generation through low-cost financing. “Investors continue to show a strong appetite for attractive investment opportunities in clean energy such as our hydroelectric generation portfolio,” she said.

Cube Hydro began as a portfolio company of I Squared Capital, along with Enduring Hydro, in January 2014 to develop and operate small to mid-size hydroelectric plants primarily in the US. Its 13 operating plants are located throughout New York, Pennsylvania, Virginia and West Virginia, generating a capacity of 106MW and an expected annual generation of over 340,000 MW/hour.

Earlier this year, Cube Hydro closed on a deal giving it a 100 percent stake in 10 run-of-the-river hydro facilities in the US northeast and added 83MW of generation in assets. Cube Hydro also purchased a 3MW plant and 82.8 percent interest in 13.6MW plant, both in upstate New York. In June, the Washington State Investment Board committed $200 million to Cube Hydro through the ISQ Cube Hydro Co-Investment Fund, LP.

Founded in 2012 by former executives of Morgan Stanley including Sadek Wahba, Gautam Bhandari and Adil Rahmathull, I Squared Capital specialises in energy, utilities and transport in the US, Europe and select high-growth markets. The firm closed its debut ISQ Global Infrastructure Fund earlier this year on its $3 billion hard-cap.

This article was first published on Low Carbon Energy Investor, Infrastructure Investor’s sister publication dedicated to global energy transition markets.