ImpactAlpha LP/GP: CalPERS and CalSTRS seek returns on inclusion

Greetings, Agents of Impact! 

Welcome to this week’s ImpactAlpha LP/GP, where we take you inside the real business of impact investing and the dynamic relationships between owners, managers and intermediaries of impact capital.

In this week’s newsletter:

• CalPERS and CalSTRS seek returns on inclusion
• TPG’s climate resilience play
• Farmer-friendly solar
• Carsten Stendevad’s move from Bridgewater to Acumen

Featured: Returns on Inclusion 

CalPERS and CalSTRS find alpha in emerging managers that have earned ‘the right to win.’ It felt like a time capsule from another era. At last week’s Catalyst event in Sacramento, Calif., officials from California’s two major public pension plans, CalPERS and CalSTRS, repeatedly made the case that emerging and diverse fund managers can and do outperform. Their recommitment to diversity, equity and inclusion practices would have been unremarkable several years ago. In 2025, it counts as downright courageous. “Now’s not the time to be quiet,” CalPERS CEO Marcie Frost told attendees at California’s Emerging and Diverse Investment Manager Forum. The two California pension funds have long been outliers compared to most of their institutional peers. But as the No. 1 and No. 2 largest pension funds in the country, they’re big outliers. The state’s public employees retirement system had $506 billion under management as of last June. The teachers retirement system managed $350 billion as of March 31.

• Peak ambiguity. The current fundraising environment is “incredibly difficult,” said Pamela Pavkov of TPG Next, the emerging manager platform of the $250 billion private equity firm, which two years ago won a $500 million allocation from CalPERS to develop a portfolio of diverse and emerging managers. “Unfortunately, the reduction in capital availability has disproportionately hurt new firms,” she said. TPG NEXT has raised just $64.5 million of additional capital since CalPERS’s commitment. “This ecosystem, in our view, has so much potential for generating outsized returns and yet continues to lack access to capital.” Out of the 170 managers Muller & Monroe screened on behalf of CalSTRS over the past year, less than a third of them were invited to a first meeting. Four of the managers were considered for a commitment from CalSTRS. Only two received an allocation. “It’s a very tough, very narrow gate to get through. You have to be stubborn, and you have to believe that you’re special,” said Muller & Monroe’s Andre Rice.
  
• Co-investment reset. CalPERS may have carried its search for no-fee, no-carry investments too far. The ability to offer “co-investments” has become a central feature of fundraising for private equity and debt funds and other investment vehicles, as institutional LPs push their fund managers for more access to direct investments – and for lower fees (see, “That (mixed) feeling when your LP co-invests in the sweet deal you’ve just negotiated”). But CalPERS co-investments underperformed its fund investments over a couple decades. “I think what was going on was there was an effort to, as the primary goal, get co-investment volume,” said Anton Orlich, CalPERS managing investment director for private equity. “Essentially, we were allocating more of our capital to lower-conviction managers on the promise of the fee-with-carry savings.” The pension fund reset its policy to focus on manager selection first, with co-investment as a bonus. The difference in returns on a manager in the top quartile of all funds and one at the 50th percentile is double any savings on fees, Orlich said.
  
• Seeking outperformance. Rather than a blast from the past, CalPERS and CalSTRS may be a signal for the future. Under California’s Proposition 209, passed by voters in 1996, the pensions are barred from making investment decisions based on racial, ethnic or gender characteristics. “We’ve been operating under this environment for 30 years,” said CalPERS Miguel Silva. “We’re still full speed ahead on the programs that we’re operating, so it’s no change for CalPERS.” In an on-stage conversation, Sundial Group’s Richelieu Dennis said research and experience shows “diverse managers are outperforming their non-diverse managers.” Dennis has been investing in funds ever since he sold Sundial Brands to Unilever in 2017 for $1.6 billion. “At the end of the day, if your job is to get an outsized return for your investors, this is the place to do it – diverse managers, managers that come from different backgrounds, different perspectives. And it’s not to exclude anybody, it’s to include everybody.”

• Keep reading, “CalPERS and CalSTRS find alpha in emerging managers that have earned ‘the right to win’,” by David Bank and Roodgally Senatus on ImpactAlpha.

Dealflow: Climate Finance  

TPG Rise Climate’s foray into climate resilience and adaptation. TPG’s climate-focused fund has joined with Milan-based Renaissance Partners to acquire a controlling stake in SICIT Group. The Italian company converts leather tanning waste into new products, such as biostimulants to boost crop growth. SICIT marks TPG Rise Climate’s first climate adaptation play. The company’s biostimulants make crops more nutritious while protecting them from environmental stress “as more frequent extreme weather events increase pressure on crop yields and available arable land,” said TPG’s Joerg Metzner. The firm has identified adaptation and resilience – including disaster prevention and response, grid hardening, business resiliency and insurance, and protecting access to food and water – as a growing investment theme (for background, see, “Temasek on hot sectors for PE investment in climate adaptation and resilience”). 

• Changing hands. Renaissance Partners and Intesa Holding, a leather tannery holding company in the city of Vicenza’s leather district, acquired a majority stake in SICIT in 2021 and took the company private. The partners sold their stake, with Renaissance reinvesting in the new transaction via its fourth investment fund. LGT Capital Partners, Schroders and Intesa also invested. “TPG Rise Climate is the ideal partner to further accelerate SICIT’s growth, leveraging their global network and deep industry expertise,” said Tommaso de Bustis Figarola of Renaissance. 

• Circular economy. TPG Rise Climate led a $100 million Series A round last year for Syre, a North Carolina-based recycler of textiles that was started by H&M Group and Swedish venture builder Vargas. Syre is looking to build two gigascale recycling plants. In 2023, TPG picked up a stake in A-Gas, a London-based company that captures and reuses refrigerant gas, from KKR. The same year it led a $700 million debt and equity financing round for Hybar, a sustainable scrap metal recycler. The company is building a steel rebar mill in northeastern Arkansas adjacent to a solar facility that will provide power.
  
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Doral Renewables locks in $1.5 billion for agri-solar farms in Indiana. A developer, owner and operator of solar and energy storage, Doral Renewables raised $1.3 billion in construction debt for three solar installations in Indiana. The three projects will generate 300 megawatts of energy each, part of a larger 1.3 gigawatt facility expected to power nearly 275,000 households by late next year. Doral, based in Philadelphia, specializes in “agrivoltaic” farming, with livestock grazing and crops grown underneath and between the solar panels. The Mammoth Solar project leases land from 65 farming families, providing extra income for farmers and diversifying what are often mono-cropped fields. 

• Tax equity. The deal was arranged by KeyBanc Capital Markets, Banco Santander and HSBC Bank and made up of $412 million in construction loans, $614 million in tax equity bridge loans, and a $259 million letter of credit facility. Truist offered a $200 million tax equity commitment for one of the Mammoth projects. The tax credits, a critical component of US solar construction, are at risk of being eliminated in the Republican budget and tax bill. KeyBanc’s Nadav Hazan said the company “looks forward to the impact Mammoth will have on Indiana’s economy going forward.” The deal follows a $400 million minority equity investment in Pennsylvania-based Doral by Dutch pension fund administrator APG last year, on behalf of the Dutch pension fund for government and education sector employees. 

• Red state renewables. Republican-led states including Oklahoma, Nevada and North Dakota have been among the biggest adopters (see, “The surprising states leading the US to wind and solar energy abundance”). Mammoth Solar will be one of the largest solar facilities in the US when it is completed. The three projects currently under construction will use 20,000 tons of Indiana-sourced steel and over $1 million worth of solar modules made in the US. Doral has secured long-term power purchase agreements with utility companies for all three installations. Its portfolio comprises some 15 gigawatts of solar output in 20 states across the US.
  
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Dealflow overflow. Investment news crossing our desks:

• London-based Local Pensions Partnership Investments will allocate £500 million ($668 million) from its newly launched LPPI Environmental Opportunities Fund for agriculture, forestry and other natural capital investments. (AgriInvestor)
  
• Brookfield Asset Management, Blackstone and JPMorgan Chase are financing a nearly $1 billion debt package to facilitate Apollo’s $2 billion acquisition of PowerGrid Services, a provider of grid support services for electric utilities. (Bloomberg)
  
• Chobani will acquire plant-based food delivery service Daily Harvest for an undisclosed amount. Daily Harvest, based in New York, is backed by Lightspeed, Collaborative Fund, Lone Pine Capital and Serena Williams and Gweneth Paltrow. (Chobani)

Signals: Impact First

Jumping from Bridgewater to Acumen to bend finance toward impact. Carsten Stendevad has spent his career in institutional finance with one eye on impact investors. More specifically, on Acumen, the nonprofit investment fund. The Dane was first introduced to Acumen’s founder Jacqueline Novogratz more than 20 years ago while working for McKinsey & Co. “I heard about this team whose central idea is using the power of investing to solve pressing challenges. I was very intrigued,” Stendevad tells ImpactAlpha. As Acumen’s new chief investment officer, Stendevad is putting that idea into action at a pivotal moment. Acumen, with about $300 million in assets under management, is trying to raise more than $750 million for multiple funds and initiatives, including its Hardest-to-Reach initiative for energy access in Africa’s frontier markets and for climate adaptation for smallholder farmers. “It has picked the hardest goals,” says Stendevad. “It’s an exciting expansion of its capability to have an impact.”

• Institutional chops. Stendevad brings to the job what he calls “a toolkit of how to think about investing.” It’s a modest choice of words. Stendevad joins the impact firm from an eight-year stint as co-chief investment officer at Bridgewater Associates, Ray Dalio’s $92 billion hedge fund, where he led its sustainability strategy. Before that he served as CEO of Denmark’s largest pension fund, ATP, and as global head of Citi’s financial strategy group. He’s an investment strategy board advisor for GIC, Singapore’s sovereign wealth fund. “The traditional capital markets often bypass the markets and countries where the needs are the greatest,” he says. “We need the entire financial system to bend toward impact.”
  
• Leaning in. Stendevad’s concern that the world could be moving in the opposite direction led him to join Acumen. “At a time when the world just seems to be pulling inwards, I felt compelled to lean in,” Stendevad says. “The cause is critical.” That Acumen, and impact investing more generally, focuses on a pipeline of solutions and creative ways to seed and finance them presented a refreshing change from mainstream finance. “You think differently about financial models, types of risk capital. You’re patient,” he says. “And you commit to being present where others are not.”
  
• Keep reading, “Jumping from Bridgewater to Acumen to bend finance toward impact,” by Jessica Pothering on ImpactAlpha.

Agents of Impact: Follow the Talent

Impact Capital Managers deploys 27 Mosaic Fellows to impact fund managers, including Claudia Chistine Ortiz to Altura Capital, Jasmine Wahelsan Ali to Impact America Fund, and Xaviera Ho to Quona Capital… Brian Komar steps down from the role of vice president of global sustainability solutions at Salesforce… Maggie Cutts, previously with Prime Coalition, joins Vibrant Data Labs as vice president of partnerships… WES’s Smitha Das, Spring Point Partners’ Margot Kane, and Priya Parrish of Impact Engine are among Ownership Capital Lab’s new advisors… Seb Soltysik, previously with Deutsche Bank, joins Aligned Climate Fund as a senior analyst… Sonen Capital is hiring an impact associate in San Francisco.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– May 20, 2025