I Squared nears $6.5bn hard-cap for Fund II

I Squared Capital’s second infrastructure fund has surpassed its original $5 billion target and is on track to hit its $6.5 billion hard-cap when it closes over the next two months or so, sources familiar with the fundraising told Infrastructure Investor.

The sources said the fund has gained a lot of traction with US LPs, with a couple of large US pension funds considering commitments, which should propel the vehicle to its hard-cap. The North Dakota State Investment Board has this week approved a $140 million commitment to Fund II, with the Washington State Investment Board committing $250 million to the vehicle in February.

Some of the fund’s other US pension commitments 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.

I Squared’s second fund is a mid-market vehicle focused on brownfield acquisitions in the transportation, utility and renewables sectors. It already has three deals under its belt, including a portfolio of Latin American and Caribbean clean energy assets it bought from Inkia Energy; the $1.9 billion acquisition of Hong Kong fixed-line business Hutchison Global Communications, which won our Deal of the Year award; and a Houston-based midstream company called Pinnacle Midstream, purchased from BP Energy Partners.

It follows the manager’s debut infrastructure vehicle, which closed on $3 billion in April 2015, drawing more than 45 investors from around the world. That fundraising took 15 months from launch to final close. The Rhode Island investment council published documents last August showing Fund I was generating a 15 percent net IRR.

Jordan Stutts contributed reporting to this story.