Scottish Mortgage’s IPO-Driven Rally Triggers £43m Treasury Sale as Premium Widens

Closed-end fund issues shares above NAV for first time in years, capitalizing on SpaceX's looming $2 trillion valuation and its own 19% stake.

Scottish Mortgage Investment Trust has found itself in an unusual position: instead of buying back its own discounted shares, it is selling them at a premium. The catalyst? A looming SpaceX initial public offering that has transformed the closed-end fund’s largest holding into a potential $2 trillion bet.

The trust placed 4 million shares from its treasury over two days late last month, capitalising on a rally that pushed the stock price above net asset value for the first time in years. The biggest chunk came on 29 May, when 2.85 million shares changed hands at 1,521.59 pence each, raising roughly £43.4 million. That followed a 1.15-million-share issuance at 1,502.02 pence the previous day. Both transactions were executed above the prevailing NAV, a mechanism the trust uses when investor demand outstrips supply and the market price exceeds the fair value of its underlying holdings.

The shift from buybacks to issuance is a telling sign of changing sentiment. During the financial year through 31 March, Scottish Mortgage had spent £1.31 billion buying back 122.88 million shares to prop up the price during a prolonged discount phase. Now, with a premium of 6.1% on 28 May — the fair NAV stood at 1,425.86 pence against a share price of 1,509.00 pence — the trust is tapping the remaining authorisation to sell up to 117.64 million shares from treasury. As of 29 May, 371.86 million shares remained in reserve and 1.11 billion were in circulation.

SpaceX: From Niche Bet to Portfolio Anchor

The driving force behind the revival is SpaceX, which now accounts for roughly 19% of Scottish Mortgage’s total assets, up from an original 7.8%. The initial £151 million investment has ballooned to an estimated £3 billion. SpaceX is scheduled to list on the Nasdaq on 12 June under the ticker “SPCX,” targeting a valuation between $1.75 trillion and $2 trillion. The company bolstered its credentials in May with a successful test flight of the Starship V3 rocket and two contract wins under the US “Golden Dome” initiative worth a combined $6.45 billion — including a $4.16 billion award for a satellite network to track aerial targets.

First-quarter figures, however, tell a more complex story. SpaceX posted $4.6 billion in revenue but a loss of over $4.2 billion, driven largely by heavy investment in its xAI division. Starlink remains the valuation anchor, generating $11.4 billion in revenue in 2025 and boasting more than 10 million subscribers.

Strong NAV Performance and Broader Holdings

The trust’s overall performance in the year to 31 March was robust. The NAV total return came in at 27.4%, while the share price total return was 26.8%. Both easily beat the FTSE All-World Index, which gained 18.0% in sterling terms. At the end of April, total assets before liabilities stood at £16.14 billion, with net assets of £14.92 billion.

Semiconductor and AI holdings also contributed meaningfully. TSMC surged 99.1% over the reporting period, ASML advanced 94.2%, and Nvidia climbed 57.5%. The dividend was raised 4.3% to 4.57 pence per share, though the yield of roughly 0.3% remains negligible for income-focused investors.

Among the private holdings, Revolut has activated its UK banking licence and now serves around 70 million customers. Redwood Materials recycles more than 95% of critical battery materials, with an annual capacity of 20 GWh. Joby Aviation is nearing commercial operations for air taxis after successful test flights in New York and Dubai.

Technical Signs and Price Action

In London, the shares closed on 29 May at 1,522.00 pence, up 0.86% on the day and 1.6% over the week. The intraday range across the week stretched from 1,484.00 to 1,540.00 pence, with an average daily volume of about 6 million shares. On Friday alone, 5.63 million shares traded.

Technical indicators flashed a “Strong Buy” signal on a daily basis, with all 12 moving averages generating buy signals and none suggesting a sell. The 20-day average sat at 1,511.79 pence, the 50-day at 1,510.31 pence, and the 200-day at 1,451.96 pence — all below the closing price. The first pivot resistance level was calculated at 1,522.34 pence, almost exactly where the stock finished, with further hurdles at 1,525.67 and 1,528.34 pence.

In Frankfurt, the trust’s shares closed May at €18.07, representing a monthly gain of 10.01% and a year-to-date advance of just over 30%.

The Crucial Fortnight Ahead

The next two weeks will determine whether the premium-driven dynamic can sustain itself. The S-1 filing and final pricing of the SpaceX IPO will reveal whether the market accepts a $1.75 trillion to $2 trillion valuation for a company that, despite record contracts, is still burning cash to invest in artificial intelligence and space infrastructure. For Scottish Mortgage, the outcome is binary: nearly a fifth of its portfolio is riding on SpaceX’s Nasdaq debut. The trust’s own shares, now trading at a premium, will reflect that verdict in real time.