Scottish Mortgage to invest more in private firms – Daily Business

Trust manager Tom Slater (pic: Terry Murden / DB Media Services)

Scottish Mortgage Investment Trust, which has backed companies such as Tesla and Nvidia, wants to put more money into private companies.

The Bailie Gifford managed trust is seeking shareholder permission to amend its investment policy.

It wants additional authority to invest up to £250 million in private companies, which currently exceeds the 30% limit on its total assets as a result of share buybacks and the rising value of private investments, including SpaceX, its biggest.

As announced in December, the valuation of SpaceX, was adjusted upwards significantly. This meant SpaceX represented a materially larger proportion of the company’s total assets as at 31 December 2025 (15.1%) compared with 8.2% just a month earlier.

Dan Coatsworth, head of markets at AJ Bell, comments: “Scottish Mortgage’s strategy is to identify tomorrow’s market leaders and inevitably that means hunting for opportunities among private companies.

“It tries to get in before the crowd and back businesses through additional funding rounds. 

“There are typically cycles with private investments, where investors either love or hate them. For example, growth-style investment trusts such as Scottish Mortgage suffered from the spike in inflation and interest rates four years ago and high-growth quoted tech company valuations were hit.

“That led to its private holdings becoming a bigger component of its portfolio, much to the concern of investors and analysts who worried about the lack of transparency in private markets. Valuation updates can be irregular and it’s often hard to know what’s going on with private businesses. 

“Interest in private companies is now picking up again thanks to SpaceX’s chunky valuation and AI success with Anthropic and OpenAI – with all three companies expected to join the stock market over the next year.

“Investors might be asking Scottish Mortgage who’s the next big thing after this trio, so it makes sense that the trust wants greater flexibility to go and hunt for opportunities. Many promising tech firms are staying private for longer and Scottish Mortgage needs to look beyond equity markets for tomorrow’s potential champions.

“However, the issues around a lack of transparency, irregular valuation updates, and liquidity, haven’t gone away with regard to private companies.

“That’s perhaps why Scottish Mortgage is only asking for a relatively small change to its investment policy rather than asking investors if it can go big. 

“If SpaceX’s IPO does go ahead as expected, Scottish Mortgage would suddenly have a lot less exposure to private markets as Elon Musk’s rockets-to-satellites group currently represents a hefty chunk of its private positions.”

The proposal will be considered at a general meeting of shareholders on 10 April.

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