I Squared Capital is working to set up a continuation fund for a 50% stake in its European truck and trailer lessor TIP Group, while it hopes to launch a trade sale for its other 50% later this year, sources said.

The US infrastructure investor is working with Campbell Lutyens to drum up LP interest in a continuation vehicle for the company, which owns and leases a fleet with around 90,000 units in 17 countries across Europe, according to the sources.

I Squared, which bought TIP in 2018 for around EUR 1.3bn through its second infrastructure fund, is separately working with UBS and JP Morgan to ready a sale of the 50% stake in TIP that is not being transferred to the continuation fund, the sources added.

I Squared, Campbell Lutyens and JP Morgan declined to comment. UBS did not respond to a request for comment.

I Squared has been mulling an exit from TIP for some time and initially lined up the two investment banks in 2022 to prepare for a sale, although it initially eyed a full divestment, Infralogic reported at the time.

A process for the sale of a 50% stake in the company, which would also help value the continuation fund, could now launch as early as September, one of the sources said.

Meanwhile, over the past year I Squared has spun off the Canadian business of TIP to re-focus the business entirely on Europe. The Canadian assets were sold last year to Transportation Equipment Network (TEN), another I Squared portfolio company previously known as Star Leasing.

Last year, it also expanded its main bank loan package to around EUR 2.3bn and its asset backed securitisation package to EUR 265m.

Amsterdam-headquartered TIP generated around EUR 1.2bn of revenues and EUR 500m of EBITDA last year, according to one of the sources, up from EUR 955m of revenues and EUR 430m of EBITDA in 2023.

This compares with EUR 565m of revenues and EUR 205m EBITDA posted in 2018, the year of I Squared’s takeover. The US investor has grown the business through multiple bolt-ons since then, including the acquisition of trailer lessors NEXT-rent in Spain and Ryder in the UK.

While its current possible valuation is unclear, Bloomberg previously reported TIP could fetch an enterprise value of around EUR 3bn.

Continuation funds are becoming increasingly popular among infrastructure investors in an M&A market that remains difficult, particularly for large assets with a limited pool of buyers. Infrastructure fund managers also rely on this structure to keep earning management fees for assets that perform well, after the initial funds that made the investment reach maturity.

BlackRock’s Global Infrastructure Partners in recent years set up continuation funds for Edinburgh Airport and Italian high-speed train operator Italo, while Stonepeak last year did the same for its long-haul fibre business euNetworks.

The process for TIP comes as I Squared is separately selling its Irish energy business Energia Group, and as it is said to be considering sale options for its UK temporary power generator Aggreko.