Baillie Gifford is looking to up the unlisted exposure in yet another one of its strategies with the board of the Baillie Gifford European Growth trust seeking shareholder approval to increase its permitted allocation to 20%.
The request was revealed in the £595m investment trust’s annual results, which revealed marginal outperformance of 24% in the year to 30 September, compared to 23% returns in the FTSE Europe ex UK index. Share price returns were 25.2% as the discount narrowed from 2.4% to 1.3%. The trust is managed by Stephen Paice (pictured), Moritz Sitte and Chris Davies, who also run the £3.4bn Baillie Gifford European fund.
Medtech distributor Addlife, specialty chemicals distributor IMCD, and heat pump manufacturer Nibe were the biggest contributors to performance.
During the financial year, the investment trust’s allocation to unquoted companies jumped from 0.9% of total assets in Swedish battery develop Northvolt to 4.5% across three companies, with new investments in two German businesses: transport business FlixMobility and logistics company Sender Technologies. The managers also added to their investment in Northvolt.
Although, the current allocation to unquoteds is well below the 10% cap already agreed by shareholders, the board of Baillie Gifford European Growth is seeking approval for the permitted allocation to be doubled to 20%.
Chairman Michael MacPhee said Baillie Gifford’s increasing reputation as a private investor was resulting in more introductions with entrepreneurs, therefore increasing the number and quality of potential investment opportunities. The Scottish asset manager currently has £5.6bn invested in 73 unlisted companies with nine of those being European.
“The combination of these factors means that the range of opportunities is broader than the one available to the managers in 2019 when management of the company’s assets was moved to Baillie Gifford,” MacPhee said.
The Baillie Gifford European Growth investment trust was previously a value-orientated portfolio run by Franklin Templeton Investments’ subsidiary Edinburgh Partners and did not have any unlisted investments.
The European Investment Trust, as it was then known, had assets of £367.8m at the time and traded at a 12.5% discount. At the end of the 2021 financial year, the Baillie Gifford European Growth trust, as it was rebranded, had total assets of £561.5m.
Shareholders will have the chance to vote on the proposals at the AGM on 3 February.
See also: Trailblazer Scottish Mortgage sparks trend of equity trusts upping unlisted exposure
