Oclaner Asset Management has launched an actively managed certificate (AMC) targeting high-net-worth individuals (HNWIs), family offices and institutional investors in Asia and Europe.
The company’s spokesperson told Citywire Asia that the OAM Uranium Opportunity Certificate is targeted at investors who are interested in the massive upside potential of investing in uranium.
‘Based on our fundamental analysis, we expect the uranium spot price to normalise between $45 to $75/lbs within the next three to four years,’ the spokesperson said.
‘Given our know-how and insights into this market, we estimate that the AMC could gain between three to five times.'
The new product is managed by Oclaner’s chief investment officer Sylvain Baude, and advised by Alexander Molyneux, who was the former CEO of Paladin Energy, an independent pure-play uranium company.
Launched on October 30, the OAM Uranium Opportunity Certificate invests predominantly into listed equities of uranium mining companies globally. It could also invest in equities of listed special purpose vehicles holding inventories of uranium oxide.
The spokesperson said the new product is an AMC that is pledged at BNP Paribas Security Services.
Unlike traditional structured products, the pledge means that the investor doesn’t bear any counterparty risk.
Beginning of a new bull cycle
The spokesperson said Oclaner’s investment team has been actively involved in the uranium market for the last four years, and has used actively managed certificates for tactical investment themes.
The company’s analysis indicates that the uranium mining sector presents the most convex return profile available within the commodity complex.
In recent months, numerous converging hints indicate that the uranium market may be at the beginning of a new bull cycle.
Spot prices for uranium, for example, have started a steady ascent, making it the second best performing hard commodity behind oil year-through-October.
Meanwhile, volume on the spot market has also tripled in October from a very low point.
Meanwhile, several governments in fast growing economies have embraced nuclear technology to reduce their carbon footprints as pollution levels become increasingly unacceptable. This could be beneficial to the uranium sector.
The Chinese authorities, for instance, have launched the construction of 21 reactors and have approved 31 more for construction.
Currently, coal is the main source of electricity in China. Nuclear energy represents only 3.6% of electricity production in China, where only 36 reactors are operating.
Meanwhile, nuclear energy represents 20% of electricity production in the US, where 99 reactors are operating.
What’s more, barriers to entry for investments into the uranium sector are high given there are no pure fund or ETF investing into the uranium sector.