Scottish Mortgage Turns the Tables on Discounts, Unleashing Share Issuance as SpaceX Countdown Accelerates

After two years of discounts and £3B in buybacks, the UK-listed trust now trades at a premium, issuing new equity to capitalize on demand fueled by SpaceX and private tech holdings.

Scottish Mortgage Investment Trust has crossed a critical threshold. After enduring persistent discounts to its net asset value for the better part of two years, the UK-listed fund now trades at a premium — and management is capitalising on the shift by selling new shares rather than buying them back.

The move marks a strategic pivot. Since 2024, the trust ploughed roughly £3 billion into buybacks to prop up its market price. Those purchases helped narrow the gap, but they also forced a steady trimming of listed holdings, inflating the weight of unlisted names in the portfolio. Now, with the stock commanding a premium, the fund can issue equity at a price above NAV, serving fresh demand without diluting existing investors.

A premium born from private promise

The catalyst is clear: the trust’s outsized exposure to private technology giants, above all SpaceX. By far the largest single holding at roughly 19% of net assets, the rocket maker is reportedly targeting an initial public offering in June 2026 at a valuation of $1.75 trillion to $2 trillion. For Scottish Mortgage, which first invested $200 million in SpaceX in 2018 and now values that stake at around $3.3 billion, an IPO would crystallise a decade of gains and inject new momentum into the fund’s net asset value.

That expectation is already priced into the shares. In London on Tuesday, the stock hit a new year high of 1,476.50 pence. Against a latest estimated cum-fair NAV of 1,390.85 pence, the premium stood at approximately 3.46%. In euro terms, the stock reached €17.02, up 22.57% since the start of the year and just a whisker off its 52-week peak of €17.15.

The contrast with the recent past is stark. Over the prior 12 months, Scottish Mortgage had traded at an average discount of 8.06%, meaning investors paid less than the underlying portfolio’s calculated value. Now they are paying more — a vote of confidence in the fund’s ability to convert unlisted holdings into marketable gains.

Beyond SpaceX: a portfolio of pending milestones

SpaceX is not the only private beast approaching a liquidity event. The trust also holds positions in ByteDance and Stripe, both of which are circling their own public debuts. In artificial intelligence, the fund owns a 2.5% stake in Anthropic, while on the listed side the portfolio remains anchored by Nvidia and ASML — beneficiaries of the ongoing AI-infrastructure investment cycle.

The breadth of these holdings has given the board the confidence to seek new flexibility from shareholders. Investors have approved an additional £250 million in capacity to invest in unlisted companies, even if that pushes the non-quoted portion above the previous 30% ceiling. The authority is granted annually, ensuring the higher allocation remains a deliberate strategy rather than a byproduct of price moves.

Management now has more freedom to follow existing private winners into later-stage funding rounds without being forced to sell liquid positions at unfavourable times. That could prove crucial as SpaceX and other portfolio companies require fresh capital ahead of their expected IPOs.

Technicals and tailwinds align

The broader market has contributed to the shift. The FTSE 100 rose roughly 0.68% on Tuesday, helped by easing geopolitical jitters and stable oil prices. For Scottish Mortgage, the technical picture looks robust: the euro-denominated shares trade nearly 10% above their 50-day moving average, while the relative strength index of 40.6 suggests no overheating.

Low costs also support the investment case. Ongoing charges run at just 0.31%, with transaction costs at 0.08% — an attractive fee structure for a fund that offers access to otherwise hard-to-trade private markets.

The next defining moment will come in the coming days, when the prospectus for SpaceX’s planned share sale is expected to land. It should provide the market with a clearer view of where the fund’s largest unlisted bet is being priced, and how much more upside — or risk — may be embedded in Scottish Mortgage’s current premium.