Wholesale investors only. Not for distribution to retail clients.
Nuclear energy has moved from political liability to policy priority in the space of a few years. C2 Gateway Series 181 is a three year structured investment that gives wholesale investors geared exposure to that theme through the SGI Global Nuclear Index VT 8%, a basket of 40 listed companies across the nuclear supply chain. The outlay is the prepaid interest, set at $17,850 per $100,000 invested, and that is also the most an investor can lose.
This article explains why the theme has drawn attention, how the Series 181 structure works, what the outcomes look like at maturity, and the risks an investor should weigh before considering it.
Why nuclear is back on the agenda
Three forces have shifted the conversation. The first is decarbonisation: at COP28 in December 2023, more than 20 countries signed a declaration to triple global nuclear capacity by 2050. The second is policy support. In the United States, the ADVANCE Act of 2024 set out to speed up reactor licensing, and in Europe the Commission launched an industrial alliance in 2024 to bring small modular reactors to market.
The third, and the most immediate, is electricity demand. The International Energy Agency estimated that data centres used around 460 terawatt hours of electricity in 2022 and that this could exceed 1,000 terawatt hours by 2026. Data centres need firm, around the clock supply, and most decarbonisation plans need low emission generation. Nuclear is one of the few sources that offers both at scale.
What is a growth structured investment?
A growth structured investment pairs exposure to a market with a loan that funds it. The investor does not put up the full investment amount. Instead, a limited recourse loan from the issuer funds 100% of the face value, and the investor prepays the interest on that loan. At maturity, the investor receives a coupon linked to how the reference asset has performed. Because the loan is limited recourse, the investor cannot be asked for more than the interest already paid, and there are no margin calls.
How the Series 181 structure works
- Term: 3 years.
- Funding: 100% limited recourse loan at 5.95% p.a., with the three years of interest (17.85% of face value) prepaid upfront.
- Minimum investment: $17,850, being the prepaid interest on $100,000 face value.
- Reference asset: SGI Global Nuclear Index VT 8% (Bloomberg: SGMDNCR8).
- Participation: 200% of the index growth over the term, uncapped. This rate is indicative and will be confirmed in the Term Sheet PDS.
- Performance Coupon: index growth at maturity multiplied by 200%, and never less than zero.
- Currency: AUD, currency hedged.
- Issuer: C2 Specialist Investments Pty Ltd.
The arithmetic is the key to the structure. On $100,000 face value, the index needs to rise about 2.9% a year, or 8.93% over three years, for the Performance Coupon to return the full $17,850 outlay. Above that point, every further 1% rise in the index adds $2,000 to the coupon, with no cap.
The reference asset: SGI Global Nuclear Index VT 8%
The index is built by Société Générale and tracks a basket of 40 companies with exposure to nuclear energy, from uranium miners and fuel suppliers through to reactor builders, equipment makers and utilities that generate nuclear power. Holdings include GE Vernova, Rolls-Royce, Hitachi, Mitsubishi Heavy Industries, Cameco, Paladin Energy, Constellation Energy and NextEra Energy, spread across the United States, Asia, Europe and Australia.
The volatility target
The index adjusts its exposure to the basket every day to keep its own volatility close to 8% a year. When markets are calm it holds more of the basket, and when they turn rough it holds less. Because the nuclear basket itself is considerably more volatile than 8%, the index has typically held only part of the basket, with exposure mostly between 20% and 50%. This is what makes 200% participation affordable, but it also means the index captures only a portion of the basket’s gains. The index carries a 1.10% p.a. fee and is calculated on an excess return basis.
Outcomes at maturity: scenario analysis
The table shows illustrative outcomes per $100,000 face value, assuming 200% participation and before tax.
| Index growth p.a. | Performance Coupon | Net result on $17,850 outlay |
|---|---|---|
| Flat or lower | $0 | Outlay lost ($17,850) |
| 2.9% | $17,850 | Break even |
| 4.0% | $24,970 | Gain of $7,120 (40%) |
| 5.7%* | $36,190 | Gain of $18,340 (103%) |
| 9.0% | $59,010 | Gain of $41,160 (231%) |
*The index’s annualised return since February 2019, including any back tested period before the index launched. Scenarios are illustrative only. Past performance is not a reliable indicator of future performance, and returns are not guaranteed.
Tax considerations
C2 Gateway investments are covered by ATO Product Ruling PR 2025/1, which addresses the deductibility of interest on the investment loan. For eligible investors, the prepaid interest can reduce taxable income and lower the after tax cost of the outlay. Whether the ruling extends to Series 181, and how deductions are timed for interest prepaid over three years, will be confirmed in the Term Sheet PDS. The deduction is not available where an SMSF borrows to fund the interest. Investors should obtain tax advice on their own position.
Key risks
- Market and theme risk. If the index is flat or lower at maturity, no coupon is paid and the prepaid interest is lost in full. The nuclear theme has already rallied strongly, and a reversal would weigh on returns.
- Volatility target risk. Because exposure to the basket is scaled down when volatility rises, the index may lag the underlying companies in a strong but volatile market.
- Participation rate risk. The 200% rate is indicative. The final rate is set at commencement and may be lower, which would raise the break even.
- Liquidity risk. The investment is designed to be held to maturity. An issuer buy-back may be available at market value, but exiting early forfeits the prepaid interest.
- Credit risk. Investors are exposed to the issuer and its hedge counterparty. C2 hedges each issue with an investment grade bank and grants investors registered security over the hedge.
- Tax risk. Deductibility depends on the product ruling and on each investor’s circumstances.
Summary
Series 181 offers a way to hold a view on the nuclear build out for three years with the downside fixed on day one. The structure needs only modest index growth to return the outlay and pays 200% of every gain above that point. Against that sits a theme that has already run hard and an index that holds only part of the nuclear basket at any time. It suits wholesale investors with genuine conviction in the theme, sized as a satellite position within a diversified portfolio.
Speak with Barker Wealth
To receive the Term Sheet PDS when it is issued, or to discuss whether Series 181 fits your portfolio, contact us, email info@barkerwealth.com.au or call (02) 8018 8998.
Important information. This article is general information only and is intended solely for wholesale clients as defined in section 761G of the Corporations Act 2001 (Cth). It does not take into account your objectives, financial situation or needs, and is not personal financial or tax advice. C2 Gateway Series 181 is issued by C2 Specialist Investments Pty Ltd (ACN 622 433 032) and arranged by C2 Financial Services Pty Ltd (AFSL 502171). It will be offered under the C2 Gateway Master PDS and a Term Sheet PDS, which you should read in full before making any decision. Terms shown, including the participation rate, are indicative and may change. Index performance may include back tested data. Target and illustrative returns are not indicative or guaranteed, and past performance is not a reliable indicator of future performance. Barker Wealth Management Pty Ltd ABN 46 695 875 962, trading as Barker Wealth, holds Australian Financial Services Licence (AFSL) 700297. Your adviser is Joshua Barker (AR 1274752). Suite 913/185 Elizabeth Street, Sydney NSW 2000. (02) 8018 8998.