CalSTRS, Hesta, QIC and AustralianSuper back multi-strategy climate investment platform Generate

Generate Capital invests permanent capital via debt and equity structures and provides operational services.

CalSTRS, Hesta, QIC and AustralianSuper are backing Generate Capital‘s latest $1.5 billion funding round. Generate is an investment company that develops climate projects by deploying permanent capital, straddling debt and equity financing and operations. The company has deployed $2 billion in assets related to clean energy generation; it also participates in projects involving energy efficiency upgrades for buildings and transportation.

There are financial and climate advantages to this model, chief executive Scott Jacobs told New Private Markets. “We don’t have to give the money back [at a specific time]. We don’t have to sell things at unnatural times. The last couple of years, the capital markets have been in a difficult period. If we were at the end of a fund life, we would have been highly disadvantaged just because of the timing.”

“We serve inefficient parts of the market where traditional sources of capital are struggling to invest,” added Jacobs. For example, “there’s enormous customer demand for sustainable solutions but most of those are in deal sizes that traditional sources of capital can’t handle. A Canadian pension plan, say, won’t invest in deals below $300 million or $400 million”. Generate bridges the financing gap between climate technology ventures and large-scale infrastructure projects, said Jacobs: the firm provides the capital and operates pilot or early-stage projects and scales them over a longer time horizon. It can then sell these assets to larger institutions.