Seraphim Space Investment Trust (SSIT) has announced its annual results for the year ended 30 June 2024. The company saw a NAV total return of 2.6%, while shares rallied 102.2%. The strong performance saw the company’s discount narrow significantly, although the share price remained depressed at a discount of 43.2% highlighting the extent of the challenges faced in recent years. This has been especially true for growth and smaller technology stocks and alternative investment vehicles.
Given the discrepancy of performance between NAV and share price, the board announced a share repurchase programme on 13 July 2023. During the year, the company bought back a total of 2,186,344 shares (0.9% of the shares in issue on 30 June 2023) at an aggregate cost of £1.0m, increasing the NAV per share by 0.44p. The shares bought back are being held in treasury.
Despite the discount, the share price performance highlights the strong momentum and growth delivered by SSIT during its financial year, driven particularity by countries pushing for sovereign space capabilities. Notably, 17 existing portfolio companies (12 of which are private and five of which are publicly traded) were able to raise c.$900m in additional funding (including further closes on previous rounds) between them during the year, ensuring that the portfolio is well capitalised to continue its positive trajectory. The company has both boosted its available liquidity and reduced the number of holdings that could require additional capital through the combination of the disposal of nine early stage holdings and the IPO of portfolio company Astroscale. With six portfolio companies, representing 60% of the portfolio by fair value, now indicating they are fully funded, the company’s reserves are expected to be sufficient to continue to meet the needs of the portfolio during the year ahead whilst enabling the investment manager to continue to seek exceptional new potential additions to the portfolio.
CEO Mark Boggett noted that the ability to raise this capital during the year is “a testimony to the portfolio’s enduring attractiveness to both other existing investors and new investors that such substantial levels of capital raising were achieved.”
Regarding the performance, he added:
“Besides these high levels of fundraising activity, the underlying performance of the portfolio was also encouraging. Buoyed by increasing demand from government customers, the private companies within the top 10 holdings (which together constitute 81.8% of the portfolio fair value and 72.2% of NAV) collectively saw their revenues increase year-on-year by an average of 71% (in Sterling) and 224%.
“On the back of such growing revenues and recent fundraising activity, we are pleased to see that the portfolio is largely well capitalised, with some of the company’s largest, more developed holdings now projecting that they have sufficient cash to reach profitability. Taken together with the increased potential liquidity represented by the listed portfolio, this strengthens our view that SSIT will continue to have adequate resources to support the needs of the portfolio as required over the year ahead.”
Commenting on the outlook, chair Will Whitehorn added:
“We envisage that recent favourable market trends will continue to benefit the portfolio. In particular, we anticipate that governments will continue to accelerate their engagement with emerging SpaceTech companies that are now the driving force of innovation within the space sector. Likewise, we expect to see increased adoption of SpaceTech by a wide array of terrestrial sectors, with the ongoing convergence of satcoms and telecoms one particular area primed for such growth.
“As concerns about inflation and high interest rates start to abate, we anticipate further improvements in investor sentiment towards growth-orientated investment opportunities. We are optimistic that this will benefit both SSIT itself and the portfolio as a whole.
“Given the Company’s current cash reserves, we expect the majority of investment activity will remain focused on supporting those existing portfolio companies we have the greatest conviction in, whilst continuing to seek out exceptional new potential investments that may offer our investors exposure to new facets of the burgeoning space market.”
SSIT: Annual results a sign of what’s to come for Seraphim Space Investment Trust