Cape Lambert Resources Limited (ASX:CFE) will extend cooperation with DGWA, a leading European investment banking boutique, as it develops a listed and actively managed portfolio focused on mining and resource investments.
Deutsche Gesellschaft für Wertpapieranalyse GmbH (DGWA) will advise and support Cape Lambert in its development to an institutionalised listed portfolio company.
This will see Cape Lambert become one of the very few listed, actively managed portfolios in the resource space that meets institutional requirements and offer a product for European investors to increase their resource exposure.
Increased European interest in resources
DGWA’s managing director Stefan Müller said the extended cooperation with Cape Lambert came at a time when there was steadily increasing interest from Europe in resource investments.
This was mainly due to the growing demand for battery materials, the increasingly volatile traditional stock markets that were lacking direction as well as the recent and likely continuing gold boom.
Müller said in the past European investors had minimal notable resource exposure in their portfolios but were increasingly recognising that this asset class delivered above-average prospects for returns uncorrelated to traditional forms of investment.
“It is equally obvious that resource investments have to be managed differently from bonds or traditional equity investments for example as investments in the resource sector not only come with above-average rewards but also higher risks.
“Unquestionably, a diversified portfolio is, therefore, the easiest way to optimally share in the rewards of this sector.”
30% of shareholder base from Europe
Cape Lambert is well placed to benefit from increased resources interest in Europe with 30% of its shareholder base from the continent, its existing multi-asset base and its new strategy.
Statistically, more than 90% of listed resource projects would not go into production, Müller said, with the reasons for this being as multi-layered as they were complex.
“Thus, the basic requirements for sustainably successful investments in this sector are intensive due diligence, a dynamic investment process as well as strict risk management.
“Cape Lambert has many years of investment experience in this sector and has successfully been involved with many resources and in various regions.
“As Cape Lambert's partner, DGWA will bring in its know-how in compliance, governance, investor awareness as well as risk and portfolio management.
“As a result, what Cape Lambert can offer is a listed portfolio that is professionally managed just like a traditional investment fund - but at a lower cost and with significantly greater flexibility in a sector that is so strongly underrepresented in Europe.”
An actively managed portfolio has benefits
Adjustments to Cape Lambert’s portfolio, including withdrawal from a project in the DRC and entry into a new project in a different commodity and country, he said, demonstrated the benefits of an actively managed portfolio as the changes were a consistent adjustment and advancement of the investment structure.
“With continued application and improvement of this approach, Cape Lambert should be able to grow its investor (shareholder) base significantly, especially in Europe,” Müller said.
As one of Europe’s leading investment banking boutiques in the resource sector, DGWA will assist and support Cape Lambert in its ongoing development.