Updated with comments from fund manager Mark Boggett.
Seraphim Space (SSIT) has declared 2025/26 a “watershed” year after the portfolio of mostly private space technology companies more than doubled with a 39.7% gain in the fourth quarter rounding off an exceptional 12 months.
Annual results show net asset value (NAV) per share increased by 102.9% to 240.49p in the 12 months to 30 June as the fair value of SSIT’s holdings leaped 133% to £605.5m from £374.3m.
This underpinned a 119.4% total return for shareholders, despite a fall in the share price at the end in the period after the company’s £136.5m C-share issue in May.
ICEYE was the main driver of this as the Finnish satellite company “continued its transformation into a global defence and intelligence leader” with a €1bn funding round in June valuing the company at over €10bn.
It made up 53.9% of the portfolio at 30 June, dominating a portfolio where All.Space, the UK satellite antennae provider, D-Orbit, the Italian space logistics company, and HawkEye 360, the recently floated US geospatial data analytics company, were the next biggest holdings at 6.4%, 5.8% and 5.3% after notching significant gains of their own.
The FTSE 250 company has set aside £54m for a performance fee to its fund manager although it said the timing of the payout was subject to various conditions, including the availability of cash. The managers are required to re-invest 15% in SSIT shares.
The C-share issue lifted SSIT’s market value to £555m and enabled the trust to invest more in its portfolio companies and start to decrease the reliance on ICEYE. One of these companies, Xona Space Systems, has since jumped to become SSIT’s second biggest investment after a new fund raising, not yet disclosed by Xona, added £52.2m to the valuation of the Californian company developing a constellation of low-orbit satellites.
Mark Boggett, chief executive of Seraphim Space Manager, said: “This was a landmark year for the portfolio. Fair value more than doubled over the period and now stands at 3.6 times cost. This represents an important milestone: five years after the company’s IPO, the gross portfolio IRR [internal rate of return] was 27.9% at the period end. Over the same period, the annualised NAV total return per ordinary share was 19.1%, broadly in line with the company’s long-term target of at least 20%.”
The year coincided with SpaceX’s record $1.8trn flotation in June establishing SpaceTech as an asset class and helping to lift private equity investment in the sector to $20.8bn in the third quarter. This was an increase from $8bn in the previous quarter and compares to $12bn for the whole of last year.
Portfolio “popping”
Boggett told QuotedData he was “unapologetic” about the size of the £379.7m holding in ICEYE given that the £274.6m increase in its valuation had accounted for three quarters of the growth in SSIT during the year. The trust reported £374.3m of investments after £28.6m of disposals at 30 June.
He said: “We’ve got a range of other companies ready to start popping”, highlighting the ICEYE levels of growth achieved by Xona, which he said was the only private company in the world to have won a licence from the US Federal Communications Commission to use the GPS spectrum.
Xona’s initial constellation of 200 low orbit satellites provided much higher positioning accuracy and data security than traditional GPS and could be vital in the development of autonomous cars and humanoid robots, Boggett said. He described its growth prospects as “Starlink-esque” in reference to SpaceX’s satellite internet constellation and broadband service that is seen as that company’s most valuable asset.
There was more growth potential in ICEYE too, said Boggett, after the company this month signed a strategic partnership with Nokia, signalling its intention to compete with Starlink from 2028 by providing governments with secure, high-performance broadband communications from low-orbit satellites.
Including Xona, SSIT has invested £72.5m in six portfolio companies with the cash raised in May. At that rate of deployment, Boggett was confident his team could deploy the rest of the money well within the 18-month timetable set out in the C-share issue. Seraphim had a good pipeline of potential investments that included new companies not currently held in the portfolio. He said SSIT would announce the first conversion of its C-shares into ordinary shares next month.
SSIT ordinary shares slipped 3% or 6p to 193p as tech stocks fell in the US and Asia to put them at a 20% discount below the new NAV which does not reflect this month’s increase in Xona. Their share price stood at 187.8p at 30 June. The SSIC C-shares shed 1.8p or 2.3% to 78.3p.
Our view
Richard Williams, senior analyst at QuotedData, said: “An extraordinary year for SSIT, with NAV more than doubling, driven principally by the remarkable progress at ICEYE. Its €1bn funding round, valuing the business at more than €10bn, provides significant external validation of the portfolio’s largest holding, while major contract wins underline the growing importance of space technology to defence and national security. Encouragingly, the momentum extends beyond ICEYE, with Xona Space Systems’ latest funding round delivering a further substantial valuation uplift since the year end. With ICEYE accounting for 54% of NAV at June’s year end, concentration risk grows, although the manager has stated that ICEYE is the first portfolio company to “pop” and a number could follow suit. Whilst the sharp fall in York Space’s share price highlights the potential volatility of valuations in this sector, these results demonstrate that SpaceTech is evolving from a relatively niche investment opportunity into an increasingly mature and strategically important sector, supported by growing commercial demand and substantial institutional investment. The deployment of the new capital from the £136.5m C share raise puts SSIT in a strong position to capitalise on opportunities across the sector and should help broaden the portfolio’s exposure.”
