Edinburgh-based fund management giant Baillie Gifford announced its intention to raise £250 million through the launch of a new investment trust company, the Baillie Gifford US Growth Trust plc.
The new closed-end fund company will target an issue of £250 million via a placing and offer for subscription of ordinary shares.
“The company will invest predominantly in equities of companies which are incorporated or domiciled, or which conduct a significant portion of their business, in the US,” said Baillie Gifford.
“It is expected that the company’s initial investments will be predominantly in listed securities, but that exposure to unlisted securities will be increased over time.
“The company will usually invest in listed securities with a market capitalisation of at least US$1.5bn; and in unlisted securities with pre-raise valuations of at least US$500m.”
Baillie Gifford employs 1,014 people and has assets under management and advice of £180 billion as at December 31, 2017.
The new fund’s portfolio will consist of listed securities and unlisted securities up to a combined maximum of 90 holdings, typically with 30 to 50 listed security holdings.
The maximum investment in any one holding will be limited to 10% of the fund’s total assets, and the maximum amount invested in unlisted securities will not exceed 50% of total assets.
The fund’s portfolio will be managed by Gary Robinson and deputy managers Helen Xiong and Andrei Kiselev, members of Baillie Gifford’s US Equities Team and managers of the £924 million Baillie Gifford American Fund which has returned 165% over five years.
“The US is home to some very active and diverse entrepreneurial hubs, whose conditions and collective wisdom for creating innovative companies is, in the team’s view, unrivalled,” said Baillie Gifford.
“For example, Silicon Valley has become a nexus for some of the world’s most exciting technology companies, while Boston and San Francisco play hosts to deep concentrations of bio-technology companies operating at what the team believes to be the vanguard of scientific advancement in their respective fields.
“It is the team’s view that although investing through the public equity market remains a very important source of exceptional growth company ideas, increasingly these companies are choosing to remain private for longer.
“The team believes this represents a structural shift in the nature of capital markets which is likely to persist in the long term.
“The necessity to list on a stock exchange as a means of entering the next stage of growth is not as acute as it was before.
“As a result, there are many attractive businesses to be found in the private market.
“The company will seek to differentiate itself by investing across the spectrum of listed and unlisted companies.”
Robinson said: “This is an exciting opportunity for investors to gain exposure to the truly innovative growth companies in the US.
“For over two decades, our American Fund has successfully invested in these companies in the public markets.
“This new investment trust will allow the team to take the same distinctive philosophy and process that has served our American Fund so well and apply it to a broader opportunity set which includes both public and unquoted companies.”