Jean Rogers, the former global head of ESG at private markets giant Blackstone, has joined an impact investment firm that runs strategies focusing on sustainable infrastructure in emerging markets and global ocean health. The firm, Pegasus Capital Advisers, was started nearly 30 years ago by one of the original founders of Apollo Advisers, Craig Cogut.
The new role will see Rogers advise on blended finance strategies.
“I have come to believe over my time working in sustainable development and the energy transition that blended finance is really the only way to do long-term impactful sustainable development projects,” Rogers said in an interview with New Private Markets. “This structure allows not only for capital to be recycled but for knowledge to be recycled in order to amplify impact.”
Rogers said she was attracted to the sectors in which the firm operates – renewable energy, battery storage, water and wastewater – “because they align with both my engineering background and my personal bias towards solving the hard problems”.
Rogers joined Blackstone at the tail-end of 2021 as the firm completed a hiring spree of 12 sustainability professionals within a year, the firm said at the time. She was already an influential figure in sustainable finance before joining the firm, having previously founded and led the Sustainability Accounting Standards Board (SASB), which has since become part of global standards in sustainability reporting.
Rogers joins Pegasus as a senior operating adviser, a role that will occupy around half her time. She will work alongside other advisers such as Gina McCarthy, the first White House national climate adviser and former Environmental Protection Agency administrator; Terry Tamminen, former secretary of the California EPA; and Paola de Almeida, the former chief innovation officer at Mars.
“There is so much demand around the world for sustainable development. We have the tools, we have the technology and we have the capital to deploy,” Rogers told NPM. “It’s a matter of the will to address the complexity and to take a long-term view. Projects don’t always fit neatly into traditional ‘buckets’ and stakeholders can make or break a project.”
Story of Pegasus
Pegasus was founded in 1996 by Craig Cogut, who had been one the founding partners of Apollo in 1990. He had “the idea of building what he then described as a smaller version of Apollo – embracing complexity – and applying it to the middle market,” said David Cogut, co-managing partner of Pegasus, and Craig Cogut’s son. A few years into its existence, the firm oriented itself towards sustainability, though back then, Cogut told NPM, it was framed more as ‘resource scarcity’ or ‘energy volatility’.
The two founding themes – complexity and contrarianism – carried over from Apollo and sustainability was added later as a defining third pillar, said Cogut. “We sat down and really asked: ‘Where can we embrace that complexity? Where can we be contrarian? And where does sustainability apply in a way that gives us a real competitive edge?’”
Further reading: A more structured conversation around blended finance
The answer was investments in the Global South. The firm made two investments in 2012: one was a biofuels terminal in Peru and the other was an ecotourism deal based in Thailand. “Those two deals did incredibly well, and really solidified that the Global South was a great place for us to find [complexity and contrarianism] within sustainability,” said Cogut.
In 2018 the firm sought and achieved accreditation by the Green Climate Fund, the financing vehicle for the United Nations Framework Convention on Climate Change. Pegasus is one of 145 accredited entities, which include a range of organisation types, through which capital is deployed towards combating climate change. Other private markets firms on the list include French infrastructure investor Meridiam, Australian infra firm Macquarie and ResponsAbility Investments, the pioneering Switzerland-based impact firm now owned by M&G.
“We saw greenwashing was coming, so we thought getting accredited by one of the most stringent organisations in the world was a great validation,” said Cogut.
Pegasus runs two strategies – both classified as Article 9 under the EU Sustainable Finance Disclosures Regulation.
The Subnational Climate Fund has a target size of $750 million and was anchored by a $150 million catalytic commitment from the Green Climate Fund. The blended finance structure means that other investors receive their capital back, plus an 8 percent return, before capital starts flowing back to the GCF, which gets its capital back plus 3 percent. After that returns are split pro rata. The fund has done six deals so far.
The Global Fund for Coral Reefs is a $500 million target fund with a $150 million commitment from the GCF.
Blended finance, whereby a mission-led investor encourages other investors to follow it into a fund by taking on more risk or sacrificing some return, has been a fixture of development finance for decades. Interest in blended finance seems to be growing as a greater number of organisations consider how to mobilise capital at scale to mitigate and adapt to the climate crisis. Altérra, the $30 billion climate-focused investor, is arguably the most prominent recent example.
Rogers underscored the importance of blended finance as a mechanism for enduring sustainable investment. “Pegasus provides the right kind of finance, tailored for the project needs, to optimise sustainable outcomes, as well as delivering returns for the fund investors; that is so refreshing to me,” she told NPM.
“They [Pegasus] are investing in infrastructure for a sustainable world,” she continued. “There is money to be made; we’re building assets that are meant to endure over the long term, and the models for doing this come from public-private partnerships. It is an old-school concept, which is where I started my career. Of course now they’re much more innovative; they are designed for a more complex set of project dynamics and stakeholders.”
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