Masdar launches clean energy fund with Deutsche bank

Firm also announces tie-up that could see version of Masdar City built in Malaysia

ABU DHABI // Deutsche Bank and Masdar, the Abu Dhabi Government's clean-energy firm, launched a $265 million (Dh972.5m) fund yesterday that will invest in clean-energy technology across the world. The announcement on the sidelines of the World Future Energy Summit came on a day that saw a major tie-up with the Malaysian government, which could build its own version of Masdar City, the carbon-neutral development; and announcements by several firms that they would open offices in Masdar City.

The opening of the fund mirrors a similar, $250m fund Masdar created in 2006 with Credit Suisse, which has taken stakes in small- to medium-sized clean energy firms overseas. Masdar said in a statement that the new fund would focus on "expansion and later-stage companies", suggesting it would target a slightly larger tier of firms than the first fund. Firms receiving the support of the fund would benefit from the business opportunities presented by the deep pockets of Deutsche Bank and Masdar, said Sultan al Jaber the chief executive.

"We understand both the financial and social value of the companies that are tackling global environmental challenges," he said. "We are committed to supporting them by providing capital investment and management expertise." Also yesterday, an investment arm of the Malaysian government, 1 Malaysia Development Berhad (1MDB), signed a partnership with Masdar that could lead to the development of a carbon-neutral city in Malaysia, along with up to US$100m in joint-venture investments in the area of clean technology.

Masdar and 1MDB also intend to co-operate and invest in carbon-reduction projects under the Kyoto Protocol's clean development mechanism and put venture capital into clean-technology ventures, the Malaysian company said. "Carbon-neutral" refers to a project where any emissions of heat-trapping greenhouse gases, such as from traditional power generation or vehicle exhausts, are offset by clean-energy projects such as solar or wind power.

In 2008, Masdar broke ground for Masdar City, which will be spread over six square kilometres and house 1,500 businesses and 50,000 residents when complete in 2020. GE is the community's "anchor tenant", but yesterday Reykjavik Geothermal of Iceland and the Finnish trade groups Finpro and Cleantech Finland each announced plans to open offices in the city. Reykjavik Geothermal's largest project is the Hellisheidi power plant in Iceland, providing more than 500 megawatts of geothermal capacity.

The company has international operations in several countries, including India, Kenya, Nicaragua, Russia, Rwanda and the UAE. Its home in Masdar City would help it expand into emerging markets that "possess the best quality geothermal resources and have very attractive market dynamics", said Gudmundur Thoroddsson, it chief executive. Finpro and Cleantech Finland, which promote Finnish companies, said they planned to open their offices in Masdar City next year to focus on regional opportunities in sustainable energy and construction, energy efficiency, waste management, production of clean water and water recycling.

While there were Finnish companies already doing business in the UAE, many promising co-operation areas between the two companies "remain untapped", the two groups said in a release.