Scottish Mortgage values SpaceX stake at £3bn ahead of IPO

Scottish Mortgage has said its holding in SpaceX is worth nearly £3billion ahead of a potential highly anticipated IPO this summer.

The investment trust, which holds £15billion in assets, invested £151million in Elon Musk’s rocket firm from December 2018 until August 2021. 

SpaceX has since become the trust’s largest holding, accounting for 19.3 per cent of the portfolio, as its valuation soared.

It now values the holding at £2.92billion based on its own valuation of SpaceX at $1.25trillion, an increase of around 19 times the original investment.

That could increase if the listing reaches the widely-reported $1.75trillion, while avoiding a writedown if the valuation proves to be too ambitious.

Scottish Mortgage said its lower carrying value was ‘deliberate’. 

‘Baillie Gifford Valuations Team, along with our independent third-party provider S&P Global, values private holdings based on verifiable transactions, not press speculation,’ it said.

Scottish Mortgage values its SpaceX holding, which accounts for 19.3% of the portfolio, at £3bn

The full prospectus is expected in May or June, which will lay out detailed terms, but until then, the valuation is based on ‘speculation and unverifiable reporting and should be treated accordingly.’

Fund manager Tom Slater said the opportunity for SpaceX has grown since the trust’s initial investment.

‘SpaceX is no longer understood as a rocket company – it is becoming infrastructure for the global economy. 

‘Starlink already serves over 10 million subscribers across more than 160 countries, and we think that business is still in its infancy.

‘The opportunity broadens materially when you consider mobile connectivity, defence, aviation and maritime, and broadens again when you consider what Starship makes possible: larger satellites, orbital compute, lunar logistics and markets that do not yet exist in any meaningful form.’

He added: ‘We have followed this company closely for many years, and our conviction in its long-term potential has only grown.’

Scottish Mortgage warned it does not yet know what restrictions will apply to existing shareholders post-listing, how long the lock-up period will last, and whether it will be subject to the same terms as other pre-IPO investors.

SpaceX has proved to be a significant driver in Scottish Mortgage’s recovery since 2023.

The investment trust, managed by Baillie Gifford, soared in popularity during the pandemic as investors looked for exposure to tech companies but suffered from the spike in inflation and rising interest rates in 2022. 

It meant its private holdings became a bigger proportion of its portfolio.

While it faced criticism from investors and analysts concerned about transparency, particularly because private valuations are irregular, these holdings are now its biggest draw, particularly its investment in SpaceX, Anthropic and OpenAI.