The Sowood Capital spin-out has agreed to invest in Vulcan Power Company to fund the development of geothermal energy properties. Denham is currently investing its first independently raised fund which closed on $2 billion in May.
Commodities specialist Denham Capital Management has agreed to invest $145 million (€92 million) in Vulcan Power Company.
The investment will be made in newly issued preferred equity securities of the green power generation company.
Merrill Lynch investment fund Merrill Lynch Commodity Partners will also convert its outstanding notes into Vulcan preferred equity.
Denham’s investment will beused to develop geothermal properties with the potential to generate between 900 and 2,000 megawatts of natural steam fuel.
The firm did not respond to requests for comment by press time.
Vulcan owns geothermal properties in California, Nevada, Oregon and Arizona. Geothermal energy is generated by drilling for heated water reservoirs which produce steam that can be used as an alternative to fossil fuels. The reservoirs are replenished by re-injecting consensed water, making the energy renewable.
Boston-based Denham has approximately $4.3 billion of invested and committed capital. In May, the firm closed its fifth energy and commodities fund on its hard cap of $2 billion.
The most recent fund is Denham’s first independently raised vehicle since spinning out of failed hedge fund Sowood Capital last summer and targets investments in the oil and gas, mining, timber and power industries as well as carbon assets and energy-related infrastructure.
Denham typically targets investments in the $50 million to $250 million range across all stages of business development. The firm currently holds interests in portfolio companies in the US, Canada, South America, the Caucuses, Russia, Asia and Australia.
Also in May, the firm agreed to provide funding to Ethylchem for the construction of an ethanol dehydration plant in the Republic of Trinidad and Tobago. The facility, to be completed in the second quarter of 2009, will have the capacity to produce 100 million gallons per year of fuel grade ethanol.