Dubai Group said it had paid $49.5 million for a 30 per cent stake in Malaysian biodiesel firm GBD Investment Ltd, as it seeks to tap booming global demand for alternative fuels.
GBD's plant in Sabah state on Borneo island has a capacity of 200,000 metric tonnes a year, which will increase to 500,000 tonnes when the second phase of its construction is completed, Dubai Group said in a statement on Wednesday.
The plant can use palm oil and jatropha as feedstock and would produce biodiesel and pharma-grade glycerine for global markets, it said.
South Korea's ECO Solutions Co Ltd holds the remaining stake in GBD.
GBD has signed off-take agreements for all of its production, Dubai Group added.
"With the mandatory blending of biodiesel into petrodiesel imposed by the governments from around the world, GBD Investment maintains a bullish outlook on the long-term viability of the biodiesel market," GBD Investment chairman Hwang Jong Sic said.
High prices for crude oil and gasoline have pushed consumers to use more "green fuel" from renewable resources such as soybeans, palm oil and corn.
Biodiesel is seen as way to lessen dependence on crude oil and reduce greenhouse gases, but has been criticised for increasing deforestation and pushing up prices for edible oils.
Malaysia is the world's second largest producer of crude palm oil, after Indonesia.
Dubai Group is the latest in a string of Gulf investors who have piled into Malaysian assets, lured by the Southeast Asian country's healthy economy, booming commodities sector and fast-growing Islamic finance industry.
In March, Qatar-based Gulf Petroleum Ltd, whose shareholders include members of the Qatar royal family and the Qatar General Insurance and Reinsurance Company said it would set up a $5-billion oil and gas complex in Malaysia. (Reuters)
Dubai Group invests $49.5m in Malaysia