Souter Investments, the family investment firm of Brian Souter, the founder and chairman of Stagecoach, has bought a major stake in Argent Energy, a Scottish biodiesel producer, from Cinven, its original backer.

Stagecoach has for two years been trialling Argent's biodiesel, processed from waste tallow, which is a form of beef or mutton fat, and cooking oil such as chip fat, in some of its buses.

It rewards passengers who provide used cooking oil for recycling on the route in Scotland with discounted fares in eight biodiesel-fueled buses. It also uses a blend of 8 per cent biodiesel in all its fleet.

Argent was the first large-scale producer of biodiesel in the UK. The company owns and operates a biodiesel plant in Motherwell, Scotland, with the capacity to produce 45,000 tonnes of biodiesel a year from tallow and used cooking oil.

Existing management of Argent, including Jim Walker, managing director, and Jim Boyd, the finance director, have bought in alongside Mr Souter, while Andy Hunter, the founder, stays with the business as chairman.

Argent Energy, which is on the verge of opening a new £1.6 million pre-processing plant at its Lanarkshire site, has been credited with pioneering the large-scale commercial production of biodiesel in the UK.

Mr Walker said that Mr Souter's involvement represented "an exciting new phase" in the Argent story, which has weathered significant changes in the regulatory and business environment surrounding biofuels.

It was one of a wave of companies to announce investment plans in biodiesel, but most of its early competitors closed their refineries as the European industry was hit by dumping of cheap product from the US, falling energy prices, and a perception that the arable-based forms of biodiesel impacted negatively on the environment and agricultural food industry.

Argent has benefited from the fact that it its feedstock is deemed "sustainable" because it uses recycled oil.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive