Generate Capital raises $2 billion for sustainable infrastructure investments

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Green infrastructure investment firm Generate Capital announced Monday that it raised $ 2 billion in new funds amid a boom in clean energy projects and Wall Street’s interest in anti-pollution investments.

The new capital, which follows a $ 1 billion increase in February 2020, increases the San Francisco-based company’s balance sheet capacity to approximately $ 10 billion. Supporters are pension funds from Australia, Sweden and Great Britain

Founded in 2014, Generate sits at the intersection of two hot investment trends – clean energy and infrastructure. The company brings both capital and operational knowledge to the 2,000+ assets it owns around the world, handling everything from financing to construction to day-to-day management. Customers include cities, companies and schools.

CEO Scott Jacobs said Generate’s willingness to fund projects that others may not fund, including small deals, as well as support for early-stage technology that some consider too risky sets it apart. Additionally, Generate’s capital is not subject to any time constraints, which means the company has no incentive to make decisions with short-term goals.

Jacobs said returns are competitive, pointing out that every round of funding is oversubscribed – some as much as seven times – as evidence that investing sustainably doesn’t have to come at the expense of performance.

“We have had great success in attracting institutional investors as this is a very compelling investment-return profile for the risk involved,” he said.

All kinds of customers

Prospects come to the company with a variety of goals including infrastructure resilience, a net-zero mandate, or just saving money. Jacobs found that much of the infrastructure built in the last century was government owned, large-scale, and centrally planned rather than serving the needs of local communities.

“The infrastructure that customers want and communities need varies widely. We call them the four Ds: distributed, decarbonised, digitized and democratized. And that is exactly what actually offers these customers and communities the most compelling value proposition. ”Said.

Examples of projects include a partnership with Starbucks to develop community solar projects in New York to provide solar power to local businesses and their surrounding areas. Generate also partnered with Hillsborough County’s public school system in Tampa, Florida, which aimed to reduce its energy needs, carbon footprint, and energy bills.

Generate’s commitment meant the district didn’t have to spend any money upfront renovating the buildings. Better HVAC and building management systems have been installed, and lighting has been replaced with energy-efficient lightbulbs.

The company also worked with Chinese battery company BYD, in which Warren Buffett’s Berkshire Hathaway has a stake, to provide electric buses for customers like Stanford University and Facebook.

Jacobs said the $ 2 billion capital increase is just the beginning of the investments needed to upgrade and overhaul infrastructure in the U.S., much of which is aging and prone to extreme weather conditions caused by the Cause climate change.

And while all of the company’s funding rounds are oversubscribed, Jacobs is committed to balancing growth rate with ability to execute. Wall Street’s interest also means the company can raise capital from investors who align with the company’s long-term vision.

“Raising capital is just raising capital and there’s not much to celebrate. But they say the model works – that customers benefit, that the world is seeing great benefits from these sustainability solutions that we have put in place for seven years, ”he said.

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