Algae Tec, the biofuel company that was one of WA's best performing floats last year, has caught the eye of China.

Nearly a year to the day since its Australian Securities Exchange debut the group, valued at $158 million, has teamed up with China's Shandong Kerui Group to build an algae biofuels facility in China - the first of its size and kind in the world, according to Algae Tec.

Algae Tec wants to commercialise a technology that uses algae to make sustainable fuels such as biodiesel and green jet fuel.

It brings that technology to the table, while it hopes Kerui will use its local knowledge to help identify likely project sites and deal with Chinese authorities.

If all goes to plan, the project will use algae to produce transport fuel worth $40 million a year and be the first of many to be rolled out across China.

It is an ambitious plan and one that could pay dividends for Algae Tec's Perth-based chairman Roger Stroud and Atlanta-based executive director Garret McConchie, who collectively control 80 per cent of the company.

"China is a country truly focused on a 'blue skies' policy," Mr Stroud said. "This JV has been formed to help China move towards this goal."

Algae Tec put its shares into a trading halt yesterday while it works on a $5 million capital raising through Patersons Securities.

Having raised money at 20¢-a-share for last year's initial public offering, the latest tin-rattling will be priced at 40¢-a-share and is intended to help Algae fast-track projects in China, Europe, US and Australia.

It last traded at 63¢, valuing the stakes held by Mr Stroud and Mr McConchie at $63.2 million each.