Oil specialist Westbeck to launch electric vehicle hedge fund

LONDON (Reuters) – Oil-focused hedge fund firm Westbeck Capital will enter new territory next month with an equities fund designed to tap into growing excitement over electric vehicles, according to a draft investor presentation seen by Reuters.

Westbeck’s Electric Metals Fund will aim “to capitalize on the electric revolution”, the presentation said, investing in 30-50 stocks, many in metals hotspots Australia and Canada.

The fund will bet on both rising and falling share prices of companies focused on the raw materials needed for the development of electric vehicles, such as batteries and supporting infrastructure.

London-based Westbeck will launch the fund next month with the aim of raising $100 million this year before capping the fund at $200 million, a source close to the firm said.

The fund is believed to be one of the first — if not the first — to focus solely on electric vehicles, two lawyers and a hedge fund banker told Reuters.

Analysts at Bank of America Merrill Lynch have said they expect electric vehicles to capture about 12 percent of the global light vehicles market by 2025.

While a push by global automakers to develop more electric vehicles is generating increasing investment interest in battery minerals, much uncertainty remains. Battery raw material lithium, for example, is not rare and there could be surplus supply after a rash of new mining projects come on stream.

Technology is also changing rapidly as car manufacturers look for the cheapest solutions, which could mean different resources are required.

Of the major miners, Glencore provides the biggest exposure to battery minerals and its share price outperformed last year. BHP, meanwhile, has said it will steer clear of minerals needed only for batteries and focus on those with more certain demand.

London-based Westbeck’s new fund, which will invest in smaller and less-liquid companies, will run alongside its Westbeck Energy Opportunity Fund.

The oil-focused Energy Opportunity Fund is up 20 percent in the first two weeks of January after losing 14 percent in 2017, before fees, the source said.

Westbeck was set up in 2016 by former CQS Asset Management portfolio manager Will Smith, Jean-Louis Le Mee, who was previously at oil hedge fund firm BlueGold Capital, and Jon Mellberg, former head of Tudor, Pickering, Holt & Co.

Smith and Le Mee will run the new fund with trained physicist Jon Hykawy, who recently joined as head of research and partner.

The fund will charge a 1.5 percent performance fee and 15 percent management fee, the presentation showed.

Reporting by Maiya Keidan; Additional reporting by Barbara Lewis; Editing by David Goodman

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