Scottish Mortgage Stakes Its Claim: Premium Share Issuance Underpinned by SpaceX’s Soaring Star

After years of discount buybacks, Scottish Mortgage issues shares above NAV, capitalizing on strong demand boosted by its SpaceX stake and tech rebound.

After years of buying back its own stock at a discount, the Scottish Mortgage Investment Trust has thrown the machinery into reverse. The Baillie Gifford flagship placed one million new shares from its treasury at 1,429 pence each on Wednesday, pocketing a notable premium over the underlying portfolio’s net asset value of 1,387 pence. The move, which followed a similar 1.55-million share issuance in May and a 600,000-share placement earlier in the month, reflects a decisive strategic pivot: rather than shoring up a flagging price, the trust is now capitalising on resurgent investor demand.

What makes the timing remarkable is the trust’s recent history. Throughout 2022 and 2023, Scottish Mortgage consistently traded at double-digit discounts, prompting board-led buybacks. That period of caution officially ended in April, when the company resumed equity issuance for the first time in nearly five years. The current round of placements not only carries a premium over net asset value – typically a sign of strong market confidence – but also boosts the net asset value per share for existing holders, avoiding the dilution that often accompanies capital raises.

The trust’s ability to command a premium rests heavily on the strength of its unlisted holdings. Chief among them is SpaceX, the rocket-builder and satellite operator that has become the portfolio’s most influential position. The fund’s managers have discreetly reined in expectations ahead of the company’s highly anticipated IPO, valuing the combined SpaceX and xAI entity at $1.25 trillion. That figure sits well below speculative media chatter of $1.75 trillion, but is backed by secondary-market transactions that the Baillie Gifford team considers verifiable.

SpaceX’s transformation from a pure launch provider to a cornerstone of global infrastructure has been a goldmine for Scottish Mortgage. The trust’s initial outlay in 2018 has multiplied roughly nineteen-fold, and the stake was worth just under £3 billion at the end of March – representing close to 20% of total fund assets. The Starlink satellite network, increasingly viewed as an essential communications backbone, has driven much of that appreciation.

The broader portfolio has also recovered sharply. The trust’s net asset value has benefited from a rebound in its technology and private-equity exposure, and the shares themselves have climbed roughly 20% since the start of the year. More recent trading has pushed the price to €16.80, only a whisker below the 52-week high hit in early May. The stock’s annualised volatility of around 36% remains typical for a growth-focused vehicle, but the upward trajectory has so far held.

Even with the latest share issuance, the trust retains about 391 million shares in its own inventory, leaving a free float of 1.09 billion. The strong price level underscores renewed faith in the portfolio’s unlisted bets, and the market is now watching for the next catalyst. Analysts expect the official SpaceX S-1 filing to land sometime between May and June, providing the first audited financial statements and details on use of proceeds. For Scottish Mortgage, that document will also clarify the liquidity of its biggest holding – lock-up periods of roughly six months have been typical for comparable technology listings, meaning the trust may have to wait before it can trim or cash out.

For the time being, the trust is making the most of its renewed popularity. Each premium-placed share adds a small increment to existing investors’ net asset value, a virtuous cycle that buybacks could never deliver at a discount. If the SpaceX IPO proceeds as expected, Scottish Mortgage’s decision to step back into the primary market may look prescient indeed.