Lithium Energy, Electric Vehicles and Energy Storage

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The Super Group has identified the growth in demand for lithium based power storage technology and the related move to electrification of the world’s vehicle fleet as a global, long term trend which currently offers investors a potentially significant growth opportunity. As a result of dialogue with a number of clients and extensive research into current investment opportunities TSG has decided to create a managed fund- the LEEVES Fund- to invest in a number of companies offering attractive exposure to the sector.

The managed fund structure has been chosen to facilitate investment in six or more different markets (including the ASX, NYSE, NASDAQ, Hong Kong, Korean and Toronto Stock Exchanges).
The Fund will target established major Lithium raw material suppliers, established Lithium cell manufacturers and will also invest in Electric Vehicle manufacturers. One holding in the Fund will be Tesla (TSLA), as both an emerging cell manufacturer and a key player in the burgeoning market for both electric vehicles and lithium battery based storage for domestic, industrial and grid applications. Tesla has attracted enormous publicity and investor attention, however it is only one among many companies which are well placed to take advantage of this opportunity.

Further investments will be undertaken in each of the three segments of lithium or related raw materials; battery manufacture; and electrical vehicles and other deployment technologies (including in particular home or grid storage).

It is intended that the Fund principally invest in established companies listed on major stock exchanges; with the potential for additional investments (up to 20% of the Fund) in capital raisings or in IPOs. All investments within the targeted areas will be subject to extensive due diligence to ensure that the Fund invests in quality companies that are well placed to benefit from the underlying themes, with attributes such as  proven resource reserves; manufacturing capacity; and intellectual property assets which indicate that they will retain or assume leadership positions in the industry.

The objective of the Fund is to provide an investment in the interconnected themes of increased demand for rechargeable batteries, the growth in the use of battery based storage in homes and in the grid, and the emergence of electric power as the major alternative to internal combustion engines (ICE) in transport.

The Theme

The global imperative of reducing carbon emissions and addressing human induced climate change has spurred innovation across all carbon intensive parts of the economy, including in particular energy generation and transport. A key enabling technology for carbon reduction in both these sectors is lithium based energy storage- ie lithium rechargeable batteries.
The role of batteries in electric vehicles is obvious. Lithium based batteries have proven to be the most effective and efficient technology currently available to power electric vehicles and significant investment is currently underway to increase manufacturing volume.

Less obvious is the role battery storage will play in the electricity grid of the future. Battery storage will be increasingly deployed at both the end user level and within the grid to facilitate the use of renewable energy options such as solar and wind. Storage is essential to enable a matching of supply (eg power generation when the sun is shining) with demand (eg powering a home through the evening peak). Storage facilitates the efficient use of energy generation assets and can also play a role in deferring or negating the need for investing in new generating or distribution capacity.

The Opportunity and Benefits for Investors

For investors, the opportunity exists to participate in an industry sector poised for sustained growth underpinned by strong global “push” factors. The Fund will invest in a focussed but diversified selection of stocks encompassing the major players in each of the segments of lithium extraction, battery manufacture, and battery utilisation in electric vehicles and power storage.

The Fund will, whenever possible, invest directly in these stocks in their home exchanges, and will thus include stocks listed on the ASX, NASDAQ, NYSE, Toronto Stock Exchange, Korean Stock Exchange, and the Hong Kong Stock Exchange. The Fund will have the ability to invest up to 20% of assets in unlisted opportunities provided that at the time the investment is made no more than 10% of the Fund is invested in a single unlisted asset, and that the Fund holds no more than 10% interest in any unlisted entity.

Details about the Fund’s potential initial investments can be found here.

Some key risks of this investment are outlined here.

The Fund Manager will seek to invest in major players in each of the three segments. In general the weighting to each investment will be in line with that entity’s significance in the segment, however regard will also be had to the particular qualities of the companies which may result in a higher or lower weighting from time to time.

The Fund will provide a relatively low cost and practical means of gaining access to a diversified global portfolio of companies. Additional value will be added by the managers in conducting due diligence, monitoring and fine- tuning the portfolio in response to technology and market developments, and in identifying emerging opportunities for investment in the segment. It is envisaged that this will include partnering with established Venture Capital players in the various segments, subject to the restrictions for unlisted investments noted above.

The Fund Manager will actively assess the scope for emerging technologies to create new opportunities or risks and position the Fund’s investments accordingly. In this regard the role of the Fund’s Investment Advisory Committee is crucial in providing specific industry, technology and financial expertise and insights. Further information about the Investment Advisory Committee can be found here.

Please Note: Investments can only be made through the Fund’s Product Disclosure Statement. Please click here to receive the PDS when it is released.

The information on this website has been prepared for general information purposes only and does not take account of your financial situation or objectives. A Product Disclosure Statement will be released for this Fund and you should consider the terms of the Product Disclosure Statement before making any investment decision.