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NOVA Infrastructure Raises $1.45 Billion for Second Main Fund
Specialist investor NOVA Infrastructure has amassed $1.45 billion to back midsize operators of assets such as data centers, battery projects and water-management systems, as the firm looks to benefit both from rising demand for infrastructure tied to artificial intelligence and the industry’s relative immunity to AI-driven disruptions.
The fund
The New York-based firm wrapped up NOVA Infrastructure Fund II with more than double the $565 million raised for its debut vehicle, which it closed nearly four years ago.
The new vehicle, collected as fundraising for the overall industry has slowed significantly, reflects increased investor interest in infrastructure, as well as a belief that it’s easier to expand and sell smaller infrastructure assets than larger holdings, said Chris Beall, NOVA’s managing partner. He and Partner Allison Kingsley co-founded the firm in 2017.
Investors in the fund included the New Mexico State Investment Council as well as local pension systems in Colorado, Maryland and Seattle, according to the WSJ Pro Private Equity LP Commitments database.
The world will need investments totaling $106 trillion over the coming 14 years to meet all its infrastructure needs, creating many opportunities for private-equity firms focused on the sector, according to a McKinsey & Co. report. The consulting firm indicated, however, that institutional investors increasingly favor large capital pools while “longer exit timelines” presents a significant hurdle facing many infrastructure deals.
NOVA generally invests equity capital of $50 million to $300 million per deal, much less than the billions of dollars typically committed by larger funds, Beall said. But the firm sees potential for gains in smaller deals.
“If you’re able to grow the equity value to two or three times that, there are still lots of funds and strategic acquirers that both want to own businesses of that size and also can fund businesses of that size,” he said of the firm’s typical equity commitments.
So far, NOVA has exited two of the seven main investments it has made from its first fund, including landfill operator Integrated Waste Solutions Group, which sold its assets in Texas to a strategic buyer in 2023. The next year, NOVA sold Bold Ocean, an Annapolis, Md.-based provider of maritime-logistics services to government agencies, to J.P. Morgan Asset Management.
The strategy
The firm backs infrastructure operators across sectors such as transportation, environmental services, clean-energy and telecommunications in the U.S. and Canada, often in regions experiencing fast population and economic growth.
Investments have been made in two businesses through NOVA’s new fund. In 2024, the firm acquired UGE International, a developer of U.S. community solar and battery projects. Last year, NOVA backed DartPoints, an operator of data centers in states including the Carolinas, Ohio, Indiana and Louisiana.
The firm also sees opportunities to back water-infrastructure operators serving both governments and businesses, Kingsley said.
“We’re looking at a series of smaller water projects to do storage or desalination or other types of water and wastewater treatments,” she said.
A focus on North America has largely insulated the firm’s investments from the effects of war in the Middle East, Kingsley said. She noted that portfolio companies whose activities rely on transportation, such as warehouse operator Harbor Logistics, have contractual protection against higher fuel costs.
“We’re really serving local and regional [customers], so it’s a much more knowable risk set versus being a larger global strategy,” she said.
The context
The firm wrapped up its latest fundraising effort as advances in AI technology lift demand for data centers and supporting infrastructure, including power plants, fiber networks and water pipes. At the same time, the potential for AI-driven disruption has depressed asset values in sectors such as software.
Infrastructure investors have less reason to worry, according to Kingsley. While AI can change the way certain businesses operate, the developing technology is unlikely to replace the hard assets the firm backs, she said.
“Claude can help us run our businesses,” she said of AI developer Anthropic’s agentic system. “But Claude is not a substitute for a water-treatment facility.”