I Squared Capital closes $3bn infrastructure credit fund above target

I Squared Capital has successfully closed its second infrastructure credit fund at $3 billion, exceeding its initial fundraising target by doubling it, according to Bloomberg. The ISQ Global Infrastructure Credit Fund II has attracted commitments from a diverse range of institutional investors, including insurance companies, sovereign wealth funds, and pension funds from both the US and international markets.

This fund is four times larger than its predecessor and is targeting returns of between 9% and 11%. The fund will primarily provide senior secured loans to businesses that own and operate crucial infrastructure, such as power grids, data centers, fiber networks, ports, and terminals. Each individual investment is anticipated to range from $150 million to $400 million, with the loans secured against tangible assets and backed by contracted or regulated cash flows.

I Squared Capital, which manages approximately $60 billion in assets, is targeting investment opportunities in North America and Europe as demand for infrastructure financing continues to grow. Factors driving this increased capital need include investment in artificial intelligence, expanding energy requirements, reshoring of manufacturing, and aging infrastructure.

This fundraise follows Carlyle's $2.3 billion closing of its second infrastructure credit fund in September, underscoring the growing institutional appetite for asset-backed lending strategies that offer exposure to long-term infrastructure investment.