Scottish Mortgage eyes policy shift to boost private equity holdings

(Alliance News) - Scottish Mortgage Investment Trust PLC on Monday proposed a tweak to its investment policy, which would permit it to inject more in private companies.

The investment firm has a limit which means the amount invested in non-publicly listed firms must not exceed 30% of its assets. The new proposal would mean this limit still applies to its investment manager. However, the proposed investment policy change allows for Scottish Mortgage to invest another GBP250 million in private companies when the exposure exceeds the 30% ceiling.

Scottish Mortgage, whose portfolio includes a who's who of technology firms, said the "use of such additional capacity would be subject to tight parameters", oversight and a yearly shareholder renewal. Scottish Mortgage is managed by Baillie Gifford & Co.

"In practice, the company's level of exposure to private companies is driven by various factors, including share buybacks as well as quoted valuations of public investments and revaluations of private companies, which are not within the company's control. The board recognises that this can result in the private companies exposure approaching, or increasing above, the 30% limit without any additional investment activity," Scottish Mortgage said.

"For example, the company bought back shares for a value of approximately GBP3 billion across 2024 and 2025. This buyback activity had a positive impact on the company by limiting discount volatility, creating meaningful accretion to net asset value, maintaining a stable shareholder register and narrowing the discount. However, such buybacks have been predominately funded by selling public company securities and therefore increased the portfolio weighting to private companies."

Scottish Mortgage also noted "several upwards revaluations of private investments" recently, including at rocket launcher Space Exploration Technologies Corp, or SpaceX. SpaceX is Scottish Mortgage's largest investment. SpaceX represented just over 15% of its portfolio at the end of December, compared with 8.2% in November.

SpaceX is moving ahead with plans for an initial public offering that would seek to raise significantly more than USD30 billion, in a transaction that would make it the biggest listing of all time, Bloomberg in December. It is targeting a valuation of about USD1.5 trillion for the entire company, according to the Bloomberg report.

Scottish Mortgage added: "While these developments have been beneficial to shareholders, together with other market movements they have resulted in the aggregate amount invested in private companies exceeding the 30% limit. As a result, the company's ability to make further investments in private companies, including follow‑on investments, is currently constrained.

"Following consultation with a broad range of shareholders, the board considers that there may be circumstances in which it is in shareholders' best interests for the board to be able to approve, to a limited degree and subject to appropriate corporate governance oversight, additional investments in private companies notwithstanding the fact that the exposure to private companies exceeds the 30% limit."

The firm believes the new policy hands it the flexibility to make a "small number of new and follow-on investments" in private firms.

A general meeting has been called for April 10 to back the proposal.

"In the event that the resolution is not passed at the general meeting, the company will continue to operate in accordance with its existing investment policy. In those circumstances, and while the aggregate amount invested in private companies remains above the 30% limit, the company's ability to make further investments in private companies (including follow-on investments) will remain constrained," it added.

Among listed firms, its largest holdings include ASML Holding NV, Amazon.com Inc and Nvidia Corp.

Shares in Scottish Mortgage rose 0.8% to 1,191.00 each in London on Monday morning. The wider FTSE 100 was up 0.2%.

By Eric Cunha, Alliance News news editor

Comments and questions to newsroom@alliancenews.com

Copyright 2026 Alliance News Ltd. All Rights Reserved.

Scottish Mortgage