Baillie Gifford to launch US patient capital trust

Baillie Gifford has announced its intention to raise £250m by launching a patient capital trust that will target American companies with long-term growth prospects.

The US Growth Trust seeks to produce long-term capital growth by investing in companies which are incorporated or domiciled in the US.

Initially, the Scottish investor said it would be investing in listed securities with the aim of increasing its exposure to unlisted firms, with pre-raise valuations of at least $500m (£360m), over time.  However, it said that the maximum amount invested in unlisted businesses will not exceed 50% of the total assets within the fund.

In a statement, the firm explained that one of the reasons it decided to launch a patient capital-style trust targeting US firms was because increasingly “companies are choosing to remain private for longer”.

“The necessity to list on a stock exchange as a means of entering the next stage of growth is not as acute as it was before,” it said. “As a result, there are many attractive businesses to be found in the private market. The company will seek to differentiate itself by investing across the spectrum of listed and unlisted companies.”

It settled on American-based growth companies because “the US is home to some very active and diverse entrepreneurial hubs, whose conditions and collective wisdom for creating innovative companies is, in the team’s view, unrivalled”.

The trust’s investment universe will include a maximum of 90 holdings, 30 to 50 of which will typically be listed firms. To tackle potential liquidity issues, the asset manager cannot invest more than 10% in any one holding.

It will have an ongoing annual management charge (AMC) of 0.7% on the first £100m on the net asset value of the investment company and 0.55% thereafter. However, the firm has said it will bear all other ongoing operational costs.

Gary Robinson (pictured) will manage the trust alongside fellow members of the Baillie Gifford US equities team, Helen Xiong and Andrei Kiselev, who will serve as deputy managers. The trio are all co-managers on the £999m Baillie Gifford American fund, which has returned 142.6% over the last five years versus the Investment Association North America sector’s 96.9%.

On the impending launch, Robinson said: “This is an exciting opportunity for investors to gain exposure to the truly innovative growth companies in the US.  For over two decades, our American Fund has successfully invested in these companies in the public markets.  This new investment trust will allow the team to take the same distinctive philosophy and process that has served our American Fund so well and apply it to a broader opportunity set which includes both public and unquoted companies.”

Details of the placing and offer for subscription will be available in a prospectus, which the firm will publish in early to mid-March.

Baillie Gifford expects the issue will close before the end of March.

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