https://www.engineeringnews.co.za
Building|Copper|Energy|Power|Projects|Resources|Shell
Building|Copper|Energy|Power|Projects|Resources|Shell
building|copper|energy|power|projects|resources|shell

Hedge fund hunts for next Australia lithium winner on deal craze

25th October 2023

By: Bloomberg

  

Font size: - +

A veteran Australian hedge fund manager is scoping out shares of potential takeover targets in the domestic lithium sector, betting that the recent flurry of deals will boost valuations.

A mergers and acquisitions spree that’s swept up miners like Liontown Resources and Allkem will carry on in Australia, according to Regal Funds Management Pty’s chief investment officer Phil King.

The hedge fund manager, who has more than two decades of experience and oversees A$6-billion ($3.8-billion), is bullish on the long-term prospects for the critical electric-vehicle battery ingredient.

“We’re going to see another wave of consolidation,” he said. “We’re focused on those companies that we think are targets.”

The Regal Investment Fund has gained 9.1% year to date, trouncing the S&P/ASX 300 Total Return Index’s 3.5% advance, according to an exchange filing as of Sept. 30.

Global miners are rushing to Australia’s lithium sector as a slump in lithium carbonate — a semi-processed form of the metal — helps spark an M&A boom. The deals are seen as more effective in expanding capacity than building new greenfield projects. A decline in valuations for some lithium producers is also making them prime targets for investors trying to find entry points into the clean energy transition and EV supply chain trade.

The world’s top producer Albemarle had until recent weeks pursued Liontown before billionaire Gina Rinehart’s Hancock Prospecting muscled its way into a takeover battle. Meanwhile, US-based Livent has agreed to combine with Allkem. Chinese producer Tianqi Lithium also made an unsuccessful attempt to acquire Australia’s Essential Metals.

Regal holds shares of Lithium Power International, which last week agreed to be acquired by Chilean copper miner Codelco, as well as Pilbara Minerals. The hedge fund previously owned Pilbara’s stock when the lithium giant was still in its infancy, but sold its early stake and has recently started re-buying the shares. Lithium Power has surged about 19% this year, while Pilbara has edged 1.1% higher.

Although lithium prices have faltered recently, “the longer term story is still very intact,” King said. “Every single major motor vehicle manufacturer in the world is either producing or going to produce electric vehicles, and that’ll continue to mean that the demand for lithium will grow strongly.”

The global shift away from fossil fuels is also presenting opportunities in uranium as it is considered a greener source of energy, according to King. His largest exposure to the commodity is through Sydney-listed Canadian company NexGen Energy, which is up 34% this year.

Regal also recently bought shares of Woodside Energy Group and Shell. King said he’s positive on the longer-term outlook for the energy sector and that oil prices should remain high amid the Middle East conflict.

Edited by Bloomberg

Comments

Showroom

GreaseMax
GreaseMax

GreaseMax is a chemically operated automatic lubricator.

VISIT SHOWROOM 
Actom image
Actom

Your one-stop global energy-solution partner

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.268 0.321s - 158pq - 2rq
Subscribe Now