OPIC pledge boosts I Squared's Asian firepower

The US development financier is providing a $200m loan to the firm in what it says is its largest fund commitment to date.

The Overseas Private Investment Corporation, the private investment unit of the US’ development arm, has committed $200 million in financing to an Asia-focused vehicle managed by I Squared Capital

The vehicle, dubbed ISQ Asia Fund, aims to grow to a total capitalisation of $600-800 million, according to an OPIC document seen by Infrastructure Investor. It seeks to invest in mid-market infrastructure assets throughout South and Southeast Asia, backing the development and operation of infrastructure projects in the transportation, renewables, waste management, water and distributed heat and power sectors.   

ISQ Asia Fund is a sub-pool of the $3 billion global infrastructure fund the firm closed last year, Gautam Bhandari, a partner at I Squared, told Infrastructure Investor. “OPIC’s capital will be invested alongside the global infrastructure fund and will de-risk our Asian investments. If the $200 million commitment of OPIC is not fully utilised, the remainder will be available to subsequent funds as well.” Bhandari added that the majority of the global fund has already been deployed. 

In Asia, the New York-based firm has made investments in operating road assets and solar projects in India, as well as in wastewater treatment plants in China. 

The 10-year OPIC loan guarantee was one of nine facilities approved by the institution last December, as part of its support to private equity funds focused on developing countries. The funds were selected through a competitive process among over 150 proposals. 

“South and Southeast Asian infrastructure requires enormous investment in the coming decade to keep pace with rapid urbanisation and economic development,” said Bhandari.

The Asian Development Bank estimates that the region needs over $8 trillion in infrastructure spending between 2010 and 2020 to sustain its growth. The World Bank argues South Asia alone needs investments of up to $2.5 trillion to bridge its infrastructure gap over the next decade.