Tata Buys Into Geodynamics  

The Indian press has a number of reports that Tata has bought into Australian geothermal power company GeoDynamics - Tata Power buys 11.4% in Oz geothermal firm.

Tata Power, India’s largest utility, has bought an 11.4% equity stake in Australia’s Geodynamics, a geothermal energy company, for A$44.1 million (about Rs 165 crore). The transaction, which will see Tata Power buy 29.4 million equity shares for A$1.50 a share, will bolster the Mumbai-based power company’s presence in renewable energy space.

In a statement to the Australian stock exchange on Thursday, Geodynamics said the purchase includes an unquoted placement option exercisable at A$2.25 per share for every two shares issued — 14.7 million options — expiring on February 28, 2009.

“The investment not only strengthens our renewable portfolio, but also creates opportunities to get a foothold in the growing renewable energy market in Australia,” said Tata Power MD Prasad Menon. Although geothermal power supplies less than 1% of the world’s energy, it is a growing energy source.

The investment will make Tata Power, Geodynamics’ biggest shareholder. Two funds — Sentient Executive and Sunsuper — jointly hold about 10% while Origin Energy, Australia's second-biggest electricity and gas retailer, owns about 7% in Geodynamics. Geothermal power is energy generated by heat stored beneath the Earth’s surface. The largest group of geothermal power plants in the world is located in the Geysers in California.

“The funds from Tata Power will strengthen Geodynamics' financial position as it prepares to make an investment decision with joint venture partner Origin Energy on the construction of a 50-MW power plant in 2009,” Geodynamics MD Gerry Grove-White said in a statement, adding that the project could likely cost about A$300 million.