Scottish Mortgage's SpaceX Paradox: How a Record IPO Triggered a Sell-Off, Aggressive Buybacks, and a Reckoning Over Private Assets

After SpaceX's historic IPO, Scottish Mortgage shares slumped 5.3%, triggering rapid buybacks. Private asset allocation exceeds 40% (SpaceX 21%), prompting a vote to raise the cap at July 2 AGM.

The largest initial public offering in history turned into a headache for Scottish Mortgage Investment Trust. When SpaceX finally listed, the trust's shares slumped 5.29 percent to €16.12 as investors who had piled in specifically for the rocket company's exposure cashed out. The classic "sell the news" pattern erased weeks of gains, forcing the Baillie Gifford-managed vehicle to launch a rapid-fire buyback campaign.

On 18 June, Scottish Mortgage snapped up 1.6 million of its own shares at 1,486.56 pence each, placing them into treasury. That transaction came just two days after the trust repurchased 2.325 million shares in a single session at a nearly identical price, the fastest pace of buybacks seen this year. The message was unmistakable: the trust only intervenes when the market price drops below net asset value. With roughly 375 million shares now held in treasury against about 1.11 billion in issue, the discount has effectively been confirmed.

SpaceX's market debut was historic by any measure. The company placed 556 million shares at $135 apiece, opened at $150, and closed the first session up roughly 19 percent, propelling its market capitalisation past $2 trillion. Scottish Mortgage holds a stake worth more than $4 billion. Yet that windfall did nothing to support the trust's own stock, which now trades at €16.91 — around 13 percent below its May all-time high of €19.50. On a year-to-date basis, however, the shares are still up nearly 22 percent.

The real story lies beneath the daily price action. Scottish Mortgage's private-market holdings have ballooned beyond its original guardrails, spurred by the SpaceX listing and a broader push into unlisted ventures. Even before the IPO, the trust's allocation to private companies had climbed to 37.3 percent of the portfolio — well above the previous 30 percent ceiling. That figure has since breached 40 percent, with SpaceX alone accounting for 21 percent. In response, the board expanded the private-equity mandate by £250 million shortly after the fiscal year ended and will ask shareholders to formally raise the cap at the annual general meeting in Edinburgh on 2 July.

The AGM agenda is packed. Investors will vote on lifting the private-asset limit, a move that would permanently alter the risk profile of one of the UK's most widely held investment trusts. They will also consider a new buyback authorisation permitting the repurchase of up to 14.99 percent of issued shares, but only when the stock trades below net asset value. In a separate vote, shareholders are expected to approve a final dividend of 2.97 pence per share, lifting the total payout for the fiscal year ending March 2026 to 4.57 pence — an increase of 4.3 percent and the 43rd consecutive annual rise. The cash is due on 10 July, subject to approval.

A notable personnel change is also on the ballot. Heather Manners, a 35-year veteran of Asian markets, is proposed for election to the board. Her appointment would add deep regional expertise to a management team increasingly focused on unlisted opportunities in growth markets.

The trust's underlying performance provides ammunition for both bulls and bears. Net asset value rose 27.4 percent in the fiscal year ended March 2026, leaving the global benchmark in the dust. Over a decade, Scottish Mortgage has delivered a NAV gain of 435 percent, nearly double the FTSE All-World's 234 percent. Yet the persistent discount — and the aggressive buybacks it triggers — suggest the market is still struggling to price the growing private-asset exposure. The 2 July meeting will determine whether shareholders give management the mandate to push even further into that opaque territory.