I Squared Capital is set to add a “customised waste and specialty cleaning and repair services” company to its $15 billion third infrastructure fund’s portfolio. VLS Environmental Solutions provides “ESG-friendly industrial waste solutions” across the US, including turning waste into alternative fuels and industrial products, oil recycling and wastewater treatment, according to a statement from I Squared. The company also provides marine and railcar cleaning services.

VLS has “highly strategic physical assets”, I Squared’s head of investor relations Andreas Moon told New Private Markets, including shredders, waste transportation fleets and facilities for waste processing, wastewater treatment and waste-to-energy conversion. But the deal is notable because VLS’s website markets the company as a customised service provider for industrial clients rather than an operator of infrastructure assets. “We look at the full value chain including physical assets as well as essential services when evaluating opportunities for infrastructure characteristics,” Moon said.

I Squared is targeting gross returns of 15-20 percent and a cash yield of 6 percent, according to affiliate publication Infrastructure Investor. The firm will acquire VLS from mid-market private equity firm Aurora Capital Partners, which invested in the company in 2017.