I Squared Capital’s second credit fund is nearing a final close at its USD 2.5bn hard cap, far ahead of its USD 1.5bn initial target, three sources said.

The Miami-headquartered manager’s ISQ Global Infrastructure Credit Fund II, which launched at the end of 2023, has been showing strong fundraising momentum and is expected to wrap up “soon”, one of the sources said.

The second fund had raised about USD 1.7bn by last July, suggesting fundraising momentum has continued since then.

Its predecessor vehicle, ISQ Global Infrastructure Credit Fund I, closed in June 2023 on USD 715m, short of its USD 1bn target.

I Squared expects the manager will deploy around 70% of its commitments into senior secured debt and the rest into subordinated loans, according to Public School Employees’ Retirement System (PSERS) filings, which adds that the manager’s credit strategy targets “middle-market borrowers underserved by the traditional bank lender”.

The fund, which has a USD 150m commitment from PSERS, targets mainly brownfield deals. Its other limited partners include Rest Super, which has a USD 300m commitment; and Connecticut Retirement Plans and Trust Funds with a USD 200m commitment, according to Infralogic data.

The fund targets a levered return of 13% to 16%, according to the PSERS filing.

I Squared declined to comment.