Oceanic plans $60m uranium fund

Perth-based fund manager Oceanic Asset Management broke new ground when it established its first investment fund in 2005, and it plans to do the same when it launches Australia’s first specialist uranium fund this year.

Oceanic has a very low profile in Australia, but if all goes to plan the group will have close to $1 billion under management within a couple of years.

Oceanic’s first fund was the Australian Natural Resources Fund, established in the UK two years ago and currently worth about $170 million.

The fund has achieved impressive investment returns since launch, and on the strength of that Oceanic is aiming to raise more money in the UK and lift the value of the fund to $350 million by the end of the year.

The group’s second fund will be the Oceanic Uranium Fund, to be listed on the Australian Securities Exchange.

Oceanic will soon issue a prospectus to raise up to $60 million for the uranium fund.

The group’s third fund will be an absolute return fund that will target the global resources sector but without the restrictions that constrain its existing fund.

The group’s aim is to have $500 million in the absolute return fund within two years, with most of the money likely to come from investors in Asia and North America.

Oceanic’s founder and chairman was David Jones, who has been involved in the private equity sector for several years and believed that experience could be applied to a regulated investment fund.

Director Stuart Bell, formerly of Patersons Securities, said the money for its first fund came from UK investors who were offered a novel product – a fund regulated in the UK but run by specialists with local knowledge in Perth.

“It is regulated by the FSA in the UK but managed in Australia,” Mr Bell told WA Business News.

“That had never been done before. We thought the need was pretty obvious.”

Mr Bell said Oceanic’s principals had to put $1 million of seed capital into the fund so as to establish a track record, but institutions had since become more supportive.

The main backing has come from UK institutions that see Oceanic’s boutique fund as complementary to large, global investment funds.

Mr Bell believes the logic of having a specialist uranium fund is also pretty obvious, even though most uranium stocks have already achieved massive capital gains.

He anticipates the growth of the global nuclear industry will underpin uranium prices for several years.

“We are bullish on energy for the medium to long term,” co-director Elliott Rowton said.

Just as important, Oceanic aims to pick quality uranium companies that will actually get into production.

“It’s very hard for retail investors to get hold of the really good uranium stocks, not the froth and bubble,” Mr Bell said.

The uranium fund will be chaired by Nova Energy director Warren Davies and its board will include Tox Free Solutions executive chairman Ian Burton and former Australian Securities Exchange listing manager Tony Walsh.

Sydney broking firm Tricom Equities has been appointed to manage the public offer of shares in the uranium fund, which will invest globally.

Mr Bell said the planned absolute return fund would be “punchier” compared with the Australian Natural Resources Fund.

In particular, Oceanic would be able to take big positions in ‘high conviction’ stocks, where it was very confident of the prospects.

In contrast, the Australian Natural Resources Fund limits its exposure to any particular stock.

It currently holds about 55 different stocks, led by Sphere Investments, Ironbark Gold, Jabiru Metals and ABM Resources.

The absolute return fund would also be able to take short positions in stocks that were tipped to fall in price, but Mr Rowton said that, in practice, it would have a long bias.

“We believe in the stronger for longer view,” he said, indicating a bullish outlook for global resources.

Investment bank UBS is lined up to be the prime broker for the absolute return fund, which Mr Bell believes will be strongly supported.

“The confidence has come from the inquiries in Sydney and New York,” he said.