Scottish Mortgage plans more private equity investments

Subject to prior approval from the Financial Conduct Authority, Scottish Mortgage intends to seek shareholders’ approval, at the Annual General Meeting on 30 June, to amend the company’s investment policy to stipulate that the maximum amount which may be invested in companies not listed on a public market shall not exceed 25 per cent of the total assets of the Company, measured at the time of purchase.

The level of the investments in private or unquoted companies within Scottish Mortgage Investment Trust’s portfolio has been rising over the past few years. Whilst Scottish Mortgage has long been able to make investments in private companies, the increase in the level and number of such unlisted investments within the portfolio in recent years has been in direct response to a shift in the balance within the capital markets between the providers and consumers of capital, rather than a change in the Managers’ investment philosophy and approach.

The Board believes this shift in the dynamics within the capital markets is likely to persist for some time, rendering the flexibility to undertake such investments of increasing importance for growth investors across the world. Currently, whilst Scottish Mortgage’s investment policy specifically lists “unquoted entities” amongst the permissible investments, there are no formal parameters set out with regard to such. Given the rising level of these investments within the Scottish Mortgage portfolio and the changing nature of the investment opportunities being seen by the Managers, the Board is of the view that this is an appropriate moment to provide clarity for shareholders on the maximum level such investments might reach.

SMT : Scottish Mortgage plans more private equity investments