Baillie Gifford trust seeks to treble unlisted investments

Baillie Gifford trust seeks to treble unlisted investments

The board of the £524m Edinburgh Worldwide investment trust is seeking to treble the permitted level of unquoted companies the fund can invest in.

Edinburgh Worldwide is managed by Baillie Gifford and invests in early stage businesses around the world. It has returned 104 per cent over the past five years, compared with 72 per cent for the average trust in the IA Global sector in the same time period.

Henry Strutt, the trust's chairman, said the current investment policy allows the board to invest up to 5 per cent of the capital into companies that are not listed on any stock exchange, but the board is seeking permission to raise this limit to 15 per cent.

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At the end of October the trust had 3.2 per cent of its total assets in unquoted companies, compared with 2.1 per cent the previous year.

Mr Strutt said the trust's managers were "alert to further special and high potential opportunities not widely accessible through public markets".

He said: "Although they still have 1.8 percentage points of headroom to invest in unlisted investments, at points over 2018 they have had concerns that the 5 per cent limit could curtail investments in potentially very exciting opportunities."

During 2014, the trust broadened its investment policy to allow a greater level of investment in companies at a much earlier point in their growth cycle.

As part of this, the amount permissible to be invested in unlisted investments was increased from 1 per cent to 5 per cent of total assets.

Since then, Baillie Gifford has established a dedicated investment team focused on analysing and investing in unlisted investments and Luke Ward, one of Edinburgh Worldwide’s two deputy portfolio managers, has been spending an increasing amount of time analysing these companies.

Mr Strutt said: "Considering the increasing quantum of interesting unlisted investment opportunities emerging that fit the portfolio managers’ criteria for investment, the board is seeking shareholder approval to increase the permissible limit in unlisted investments to 15 per cent of total assets at the time of initial investment."

He added: "The ability to identify the companies that value innovation and have the capability to develop commercial opportunities around it, is key to unearthing the market leaders of the future and is a key focus for the managers.

"Such companies can be expected to thrive regardless of the underlying economic conditions."

The board has also proposed splitting the existing shares of the trust, so that for every one share an investor owns, they will receive five new shares to help improve the trust's liquidity.

Shareholders will vote on the board’s proposal at the annual general meeting next month.