I Squared Capital attracts US pension plans to $5bn infrastructure fund

I Squared Capital is seeking to raise $5bn for its latest global infrastructure fund and has attracted commitments from Texas Municipal Retirement System and New Mexico Educational Retirement Board.

Texas Municipal has committed $150m, according to a pension fund board meeting document, and New Mexico Educational has pledged $50m.

Texas Municipal said I Squared Capital will focus on building and creating platform companies in the power, energy and utilities infrastructure sectors in OECD countries. It is targeting net returns of 13.5% and gross returns of 16%.

New Mexico Educational invested in I Squared Capital’s previous fund. As reported earlier this year, the manager was the second best performer in infrastructure for the pension fund, after Stonepeak. 

Texas Municipal is also investing $56.9m in an Australian agricultural fund managed by Blue Sky Water, a subsidiary of Blue Sky Alternatives Investment.

Blue Sky Water, which is seeking to raise AUD300m (€200m) for the fund, has a strategy that looks to take capitalise on water rights management.

According to Texas Municipal, water rights become more valuable during times of drought, mitigating the potential downside of water intensive crops failing.

The net target return for the fund is 14%.

Texas Municipal has placed both commitments into its real return portfolio.

The pension fund invests in a variety of asset classes in this portfolio, including global real estate investment trusts, and public and private infrastructure and natural resources.

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