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Summary:

Abu Dhabi is continuing to spread its oil money around, announcing a deal today to set up a cleantech fund targeting Japanese startups. Masdar, the oil-rich emirate’s cleantech development group, is teaming up with Japan’s SBI Holdings for the joint venture, with each group investing $10 […]

Abu Dhabi is continuing to spread its oil money around, announcing a deal today to set up a cleantech fund targeting Japanese startups. Masdar, the oil-rich emirate’s cleantech development group, is teaming up with Japan’s SBI Holdings for the joint venture, with each group investing $10 million.

But it could go much further than that initial $20 million. Masdar’s investment unit, the Masdar Clean Tech Fund, is in talks with SBI to raise the investment to between $200 million and $300 million after the first fund has used up its cash, according to Reuters. Each startup would reportedly receive $2 million from the new fund, creatively called the Masdar-SBI Fund.

The Masdar Clean Tech Fund already has a long list of international investments under its belt, all of which are developing applications that are useful for Abu Dhabi, such as solar power and water purification technology. Early last year, the company put some cash into Berlin-based Sulfurcell, which makes thin-film solar modules. And in 2007, the Masdar fund made its first investment in Bothell, Wash.’s HaloSource, a clean water and antimicrobial technology company.

SBI, which mostly invests in Internet-related IT, biotechnology, and media, said in a statement that it’s been “aggressively increasing” its investments in the environment and energy sector. With this new fund, it plans to target startups in energy efficiency and pollution reduction.

It’s been a busy week for Masdar as the second annual World Future Energy Summit has been taking place in Abu Dhabi. And there’s been no shortage of announcements from the state-owned group, among them starting work on a solar power plant for its planned Masdar City, and a potential re-evaluation of its investment in the London Array offshore wind farm.

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