CalSTRS, HESTA Invest in Generate Capital’s Sustainable Infrastructure Platform

The California State Teachers’ Retirement System and Australian pension fund HESTA are among the institutional investors joining in the latest round of capital raising for sustainable infrastructure platform Generate Capital PBC, which took in $1.5 billion, it announced at the end of January.

CalSTRS and HESTA—Health Employees Superannuation Trust Australia—join existing investors such as superannuation fund AustralianSuper and government-owned investment company Queensland Investment Corp. in the financing.

“Our strategic partnership with Generate Capital aligns with our mission to deliver superior financial returns for our portfolio while creating demonstrable positive outcomes for the environment and society,” said Kirsty Jenkinson, CalSTRS’ director of sustainable investment and stewardship strategies, in a release.

The $1.5 billion increases the total capital raised by Generate to more than $10 billion since its inception 10 years ago. However, Generate Capital CEO Scott Jacobs said this was far less than what is needed.

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“We need to invest trillions, not billions,” Jacobs said in a release. “Ten billion dollars is just a start.”

Generate’s platform aims to invest in the infrastructure transition, which includes building and financing infrastructure assets, as well as incubating, building and financing infrastructure companies. Since its 2014 launched, Generate has worked with more than 50 project development and technology companies, as well as dozens of investors. According to the firm, as of September 2023, it had helped produce more than 320 gigawatt hours of sustainable power and had processed more than 715 kilotons of organic waste.

In December 2023, the firm formed a joint venture with school bus manufacturer Blue Bird Corp. called Clean Bus Solutions, which aims to help school districts transition to electric school buses by providing the buses and associated charging infrastructure.

“We’re at an inflection point in the transition to a clean energy economy,” Jacobs added. “While the window for action is getting smaller every day, we have the blueprints to build the critical infrastructure that will ensure a livable future.”

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Tags: Australian Super, California Teachers’ Retirement System, Generate Capital PBC, HESTA, Kirsty Jenkinson, Queensland Investment Corp., Scott Jacobs, sustainable infrastructure

As it stands, shareholders must assent to M&A or related-party deals. But the FCA wants to ease listing requirements to stem companies decamping to New York exchanges.

Institutional investors, including CalPERS and CalSTRS, are opposing the British financial regulator’s proposal to eliminate investor approval on company financial moves.

The U.K. Financial Conduct Authority’s plan would strip requirements for a shareholder OK on “significant transactions,” such as for mergers and acquisitions and for related-party transactions, in which company officers or other affiliated people may benefit from the business’s financial moves.

The London-based International Corporate Governance Network, a watchdog group, and the Washington, D.C.-headquartered Council of Institutional Investors, along with a large group of allocators, have criticized the plan, saying it would weaken shareholder protections.

The latest objection to the FCA initiative came from the New Zealand Superannuation Fund ($42.8 billion) on Friday. In a statement posted on LinkedIn, the fund knocked the FCA plan as potentially endangering U.K. “corporate governance standards and shareholder protections.” The New Zealand fund, which joined an ICGN protest petition, argued that “investors have used [U.K. listing rules] as a gold standard when commenting on other markets’ governance and listing requirements, as well as in their direct engagement with companies.”

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In addition to the New Zealand fund, 52 allocators and organizations have signed the anti-FCA petition, including the California Public Employees’ Retirement System, California State Teachers’ Retirement System and New York City Retirement Systems from the U.S.; the National Employment Savings Trust and Church of England Pensions Board from the U.K.; and the British Columbia Investment Management Corp. from Canada.

The FCA plan is aimed at making Britain’s “listing regime more accessible, effective, and competitive,” according to an agency statement. “The proposals could entail an increased possibility of failures, but the changes set out would better reflect the risk appetite the economy needs to achieve growth.”

The FCA plan has several other provisions to streamline the process for companies going public. The agency could not be reached for further comment.

The London Stock Exchange has suffered from U.K. companies departing for New York exchanges, which enjoy far greater access to capital and liquidity. Software maker Arm Holdings PLC and plumbing supplier Ferguson PLC are two recent examples of major departures from London: Arm went to Nasdaq in 2023, and Ferguson to the New York Stock Exchange in 2022.

In the U.S., public corporations typically must seek investor approval for M&A deals and related-party transactions (of more than 5% of net tangible assets), such as a corporate lease on a building owned by the CEO’s brother.