India's well-known investors who are known for their Midas touch have spotted an opportunity in bio-fuel, betting big on ethanol, bio-mass and even bio-fuel equipment makers in India and other parts of the globe.

Billionaires Rakesh Jhunjhunwala, C Sivasankaran, Vinod Khosla, founder of Sun Microsystems, and Nemish Shah, the media-shy joint partner of Enam Financial Services, are investing in bio-fuel makers quietly, expecting that bio-fuel will have a big play in the coming years as the world looks for a viable alternative to the fast depleting oil reserves.

Jhunjhunwala, who is known for his ability to spot a multi-bagger at a very early stage, recently invested in Hyderabad-based bio-fuel firm Nandan Biometrics.

He is also a 10 per cent stakeholder in Praj Industries [Get Quote], which is a bio-fuel technology provider and equipment maker.

"Bhai (as Jhunjhunwala is known in market circles) is bullish on biofuel and the broad alternative energy space. He is looking at several unlisted companies for more investments," said a source.

Vinod Khosla, the founder of Sun Microsystems and a leading green fuel investor through his Khosla Ventures, holds a minor stake in Praj Industries.

But, Khosla, who is scouting for more investments in India, is playing a high stakes game in Brazil.

He has backed Brazilian Renewable Energy Company (Brenco) and also made investments in Segetis, founded by former Soviet scientists Sergey and Olga Selifonova, to develop renewable chemical products.

C Sivasankaran, who sold his stake in mobile phone company Aircel to Malaysian conglomerate Maxis Communications for over $1 billion, has set up "E85 Inc", an ethanol producing company in Raleigh, North Carolina, investing $200 million late last year.

"Alternative energy, broadly, is an area which we are excited about as an investment opportunity," said Rahul Bhasin, managing director, Barings Private Equity, which has invested in Auro Mira Energy, a wind energy company.

Market sources say Nemish Shah, who spotted multi-baggers Sesa Goa [Get Quote] and Infosys [Get Quote] when everyone was looking the other way in the early 1990s, is also making quiet moves in biofuel companies in India, both listed and unlisted.

Sources say little known IKF Technologies [Get Quote], which is entering bio-fuel production in a big way, has come on his investment radar.

A listed company, IKF Tech recently sought government leases for a total of 150,000 hectares of land in Swaziland, Mozambique and South Africa to cultivate jatropha to produce biofuel.

"There are several factors that can make India successful in the alternative energy space: availability of natural resources, cost-effective engineering and manufacturing talent and high cost of importing traditional fuels," said Arun Natarajan of Venture Intelligence, a PE tracking firm.