May Investment trust sector newsletter
SSIT completes landmark raise as SpaceX IPO draws closer
At the start of May, Seraphim Space Investment Trust (SSIT) completed the largest fundraising in the London-listed investment trust industry over the past three years, closing its C-share issue with gross proceeds of £137m across institutional, retail and direct subscription channels. The raise was accompanied by the IPO of portfolio holding Hawkeye 360, which surged 31% on its New York Stock Exchange debut. The fundraise arrives at a moment of heightened excitement across the spacetech sector, with the long-anticipated SpaceX IPO drawing closer.
Successive upward revaluations of SpaceX have rippled across the investment trust sector, most recently following the company's merger with xAI, which has pushed its implied valuation to $1.25tn. As discussed in our recent Uncovering Trusts podcast episode, SpaceX now makes up c 19% of Scottish Mortgage's (SMT’s) portfolio after these recent revaluations – SMT's c £200m initial investment in 2018 is now worth c £3bn. A number of other investment trusts also carry meaningful SpaceX exposure, including Baillie Gifford US Growth Trust, Edinburgh Worldwide, RIT Capital Partners and Matador Secondary Private Equity.
The Schiehallion Fund, another Baillie Gifford-managed vehicle with significant private company exposure, is also among them. Edison recently sat down with Baillie Gifford investment specialist Lucie Majstrova to discuss the fund's strategy and outlook, available to watch on Edison TV.
Saba's long shadow: Herald resolves, Schroder UK Mid Cap draws a line
Herald Investment Trust (HRI) has reached a settlement with Saba Capital, with Aberdeen assuming management of both the trust and the Herald Worldwide Technology fund – a combined £1.6bn mandate. Lead manager Katie Potts and eight colleagues will transfer to Aberdeen, with investment strategies unchanged. HRI is launching a 66% tender offer at close to NAV, giving Saba, which holds c 30% of the trust, a clear exit route, while a three-year standstill prevents the activist from voting against board recommendations at any general meeting.
Schroder UK Mid Cap (SCP) has moved similarly decisively, launching a tender offer for up to 100% of shares at the level of an individual shareholder at NAV less costs. Saba, holding a 19.5% stake, has agreed to tender its full position and enter a three-year standstill. The tender is subject to a maximum tender condition – if valid tenders exceed 16,661,822 shares, equal to 49.87% of shares in issue, the tender will not be carried out. The tender is also subject to shareholder approval on 24 June. If all conditions for the tender offer are met, realisation is expected by early August. For continuing shareholders, a new discount management policy targeting a mid-single-digit discount has been introduced alongside a triennial continuation vote from 2029.
Asia rallies as Iran peace talks ease oil pressures
Asian-focused investment trusts were among May's standout performers, staging a rally as peace talks surrounding the US-Iran conflict raised hopes of a resolution. News of a potential ceasefire and the reopening of the Strait of Hormuz drove oil prices sharply lower this month, offering relief to the region, which had been disproportionately exposed to the supply disruption. Among May’s top performers were Aberdeen Asian Income Fund (AAIF) and Invesco Asia Dragon Trust (IAD), which posted share price total returns of 11.7% and 10.2%, respectively.
Uncertainty nonetheless remains, and not all Asian equities have shared equally in the recovery. Vietnamese equities remained broadly stable over the month, as lingering uncertainty surrounding the conflict continued to weigh on sentiment towards the region's more frontier-oriented markets. That said, as highlighted in Edison's recent note on VietNam Holding (VNH), the country's structural growth story remains broadly intact – the IMF continues to forecast healthy GDP growth of 7.1% for 2026, underpinned by strong FDI inflows, robust export momentum and a pro-growth government agenda. Vietnam's confirmed FTSE Russell upgrade to emerging market status, effective September 2026, coupled with the prospect of a potential MSCI upgrade in the next few years, provides a further medium-term tailwind for the country's equity market.
HgT: Recent software sell-off now reflected in NAV
HgT’s Q126 results, released earlier this month, revealed an NAV decline of 5.4%, as an indiscriminate sell-off in public software stocks drove a 9% contraction in portfolio valuation multiples. The trust's discount widened to c 31% by the end of May, far above its 2021–25 average of 9%. However, revenue and EBITDA growth across the portfolio remained robust at 16% and 19% for the twelve months to end-March 2026 – this is notable given that earnings growth, rather than valuation multiples, has historically been the primary driver of HgT’s returns.
As highlighted in our recent note on HgT, the sudden software sell-off may present a re-rating opportunity. The trust’s managers believe that AI isn’t killing software, rather it is ‘separating the winners from the rest’, and in HgT’s case, its portfolio companies are deeply embedded, mission-critical providers to European SMEs, characteristics that make wholesale AI substitution a distant prospect. Hg (HgT’s manager) is also investing proactively in AI augmentation through Hg Catalyst, a dedicated incubator of more than 150 engineers and product managers, with multiple partnerships with AI providers, for example Anthropic, Forethought and Velaris. Optimism appears to be reflected in the actions of those closest to the business: Hg partners and employees have invested c £20m in HgT's shares year-to-date, all seven non-executive directors have made purchases and the trust has bought back £19m of stock since February.
On the Road
Coming up: The BB Biotech roadshow visits Edinburgh on 9 June, followed by the VietNam Holding roadshow, which stops in Dublin on 12 June and Zurich on 22 June. On 1 July, the Matador Secondary Private Equity roadshow visits Jersey.
