Participant Media has found a financing partner in Abu Dhabi-based Imagenation, with the two companies creating a $250 million fund that will produce up to 18 films over the next five years.

The independent production shingle formed by Jeff Skoll has previously brokered one-off deals with financiers and distribution partners for its pics.

Deal with Imagenation comes as something of a surprise.

While Abu Dhabi is quickly ramping up its film-financing efforts, investors there have expressed concern in backing any projects that may portray the Middle East in a negative light.

The region bristled at “Syriana,” which Participant produced and Warner Bros. distribbed, saying the pic tied Dubai too closely with terrorism.

But Imagenation isn’t opposed to producing controversial films that make noise or spur debate; it just doesn’t want to make pics that insult Arabs.

The revolving fund will enable Participant to work with just one financing partner. As a result, it is considering talks with studios to secure a single distributor for its films.

“We will be exploring the opportunity,” said Jim Berk, CEO of Los Angeles-based Participant Media. “It’s not a requirement, but this round of funding gives us the option.”

Imagenation, a subsid of Abu Dhabi Media Co., signaled its intent to become a player in pic production by unveiling a $1 billion film financing fund last week (Daily Variety, Sept. 3). The investment in Participant marks Imagenation’s first major Hollywood pact, although it’s overseeing a $500 million fund with Warner Bros. for Abu Dhabi.

It was not disclosed how much Participant and Imagenation have each contributed to the fund, although each is said to have contributed an equal amount. But the total combined $250 million is not made up of pure equity alone; some is being leveraged through debts, for example.

The coin will enable Participant to produce up to eight features a year, with those films expected to start rolling out in 2010. It currently produces around four films a year.

Since its formation in 2004 by philanthropist Skoll, Participant has focused on producing pics that raise awareness on social issues and inspire change. Its recent financing/distribution partners have included Overture Films on “The Visitor,” DreamWorks on “The Kite Runner” and Universal on “Charlie Wilson’s War.” Paramount Vantage was behind Participant’s Oscar-winning 2006 docu “An Inconvenient Truth.”

Deal with Imagenation will enable Participant to continue its efforts and expand the reach of its messaging overseas. Participant will take the lead in developing the films as well as overseeing production. Funding also includes P&A.

“Our long-term strategy has been to find a partner we can align with over multiple films during the next five years to both accelerate our expansion and increase our efficiency,” Berk said.

Next up for Participant is “The Soloist,” with Robert Downey Jr.; “Food, Inc.,” which bowed at the Toronto Film Festival; and the Steven Soderbergh-helmed “The Informant,” starring Matt Damon. It’s also released “Good Night, and Good Luck” and “Darfur Now.”

None of the pics are part of the new round of financing.