I Squared Capital raises $3B global infrastructure fund

Infrastructure-focused investment firm I Squared Capital (ISQ) has raised $3 billion in a global fund that will invest in assets across several markets, including India, the company has said.

The fund named 'ISQ Global Infrastructure Fund', which is one of the largest infrastructure focused private-equity funds raised in recent times, received strong response from the investors, with demand exceeding the $3 billion legal cap, it said.

Limited partners include a diverse group of pension funds, sovereign wealth funds, insurance companies, asset managers and family offices from the US, Canada, Europe, the Middle East, Asia and Australia.

“Our strategy targets investment opportunities that provide attractive risk-adjusted returns with operational upside using a global approach focusing on select sectors and regions where we have a clear comparative advantage,” Sadek Wahba, founder and managing partner of I Squared Capital, said.

The fund has so far made eight investments across 22 individual assets. Most recently, it agreed to acquire 100 per cent stake in Jaipur Mahua Tollway Pvt Ltd (JMTPL), a toll road that helps connect Jaipur with Agra, from Malaysia-based IJM Corporation in December. The deal was valued at Rs 525 crore ($85 million).

In October last year, ISQ joined hands with International Finance Corporation (IFC), the private sector investment arm of the World Bank, to provide equity investment of up to $90 million and a total debt investment of up to $150 million in an unnamed Singapore-based holding company of ISQ to acquire operating road assets in India.

Founded in 2012 by former Morgan Stanley executives, ISQ is an independent global infrastructure investment manager focusing on energy, utilities and transport in North America, Europe and select high growth economies.

It was started by Wahba (former global head of Morgan Stanley Infrastructure), Gautam Bhandari (earlier head of Morgan Stanley Infrastructure in India, Middle East and Sub-Saharan Africa) along with Adil Rahmathulla (head of investment execution in the Americas for the group).

Until 2012, when Bhandari quit Morgan Stanley Infrastructure Partners, the $4-billion infrastructure fund of US banking firm had made investments worth about $1 billion (Rs 5,600 crore) in India. Bhandari led a few large deals for the firm with investments in companies such as Asian Genco, Indus Concessions and a buyout of wind power firm Continuum Wind Energy. Not all of these turned out to be great investments.

ISQ has a presence in New York, Houston, London, New Delhi, Singapore and Hong Kong with a team of 51 professionals.

Gibson, Dunn & Crutcher LLP acted as fund counsel and Campbell Lutyens acted as a placement agent in respect of the fundraising.

Large pools of capital have been created to invest in infrastructure sector in India with the focus on the sector under the new government. Prime Minister Narendra Modi-led government, which came to power almost one year ago, has been trying to kick-start investments in the economy with infrastructure as a key plank.

Last year, IDFC Alternatives closed its new infrastructure-focused PE fund at $900 million. Diversified cash rich firm Piramal Enterprises Ltd formed an alliance with Dutch pension fund asset manager APG Asset Management for investing in rupee denominated mezzanine instruments issued by Indian infrastructure companies with a target investment of $1 billion over the next three years.

The government's other plank of boosting manufacturing in the country has not yet got the same response.

(Edited by Joby Puthuparampil Johnson)

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