Baillie Gifford £370m fund targets private firms

Baillie Gifford's current Edinburgh HQ

The £370 million Baillie Gifford UK Growth Trust is to ask its shareholders at its August 5 AGM for the authority to invest up to 10% of its assets in private companies.

The news came as the closed-end fund reported that its net asset value per share (NAV) total return was 37.7% in the year to April 30, 2021, compared to a total return of 25.9% for the FTSE All-Share Index.

Share price total return for the same period was 53.7% for the fund.

The investment trust said its performance was driven by a number of firms including online luxury fashion retailer Farfetch, construction equipment rental business Ashtead, ventilation products supplier Volution Group, and retirement income products and services provider Just Group.

Ediburgh-based Baillie Gifford & Co manages assets of around £236 billion.

“Following a review of the opportunity set and the processes and personnel in place at Baillie Gifford for evaluating and monitoring private company investments, the board is of the view that the company would benefit from having the authority to invest in private companies,” said Baillie Gifford UK Growth Trust chair Carolan Dobson.

“Over the past couple of years Baillie Gifford has assessed over a thousand private companies, approximately 180 of which were UK businesses.

“Of these 180, clients of Baillie Gifford invested in eight names across a number of different sectors, two of these have subsequently listed and one has been subject to a takeover.

“The board and managers are of the view that the assessment of private companies alongside listed counterparts is a natural fit with and extension of both the managers’ investment philosophy as well as process, and increases the opportunity set for generating positive returns for shareholders.

“As with listed companies, any private investment would need to have a market valuation in the region of £500m or more and would need to offer something that cannot be accessed in the listed space at that time.

 “The board and managers are cognisant that by their nature such investments are less liquid than listed equity investments, and therefore believe that at this point it is prudent to ask shareholders to approve a ceiling for private company investment of 10% of total assets, as measured at the time of initial investment.”

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