Baillie Gifford has given further validation to the cryptocurrency craze as it initiates a stake in Blockchain.com via James Anderson’s Scottish Mortgage trust.
On Tuesday Blockchain.com founder Peter Smith publicly shared that Baillie Gifford participated in its $300m Series C funding in March, which was led by DST Global partners, Lightspeed Ventures, and VY Capital.
The Edinburgh manager ponied up $100m (£72m) in the funding round, which Smith said is the single largest investment in the UK cryptocurrency company to date.
Crypto wallet provider Blockchain.com was founded nearly a decade ago by Smith, Nicolas Carey and Ben Reeves. The latest funding round values the company at $5.2bn.
Baillie Gifford stamp of approval
A spokesperson for Baillie Gifford confirmed the investment was made via Anderson (pictured) and Tom Slater’s Scottish Mortgage trust. Given the trust had total assets of £18.1bn at the end of March, this means the £72m Blockchain.com investment would make up just 0.4% of the trust’s NAV.
“Baillie Gifford has a long history of backing transformational growth companies at their early stages,” the spokesperson said in a statement to Portfolio Adviser.
“We have a growing conviction not only in Blockchain.com’s management team and value proposition, but in its ability to make long-term investment returns for our clients.”
Scottish Mortgage’s stamp of approval is the latest sign that cryptocurrency assets are becoming mainstream. Bitcoin’s soaring value, which last week hit a record $64,000, has caught the eye of several high rolling investors.
Ruffer took a chance on bitcoin, ploughing £550m into the cryptocurrency last November. In January the asset manager defended its controversial holding, arguing that the digital coin has merit as a long-term uncorrelated portfolio hedge similar to gold.
The same month Blackrock also added further legitimacy to crypto when it announced it was opening up two of its funds to the possibility of investing in bitcoin futures.
Scottish Mortgage unquoteds ticking up
Blockchain.com is the latest unquoted company that has been added to Scottish Mortgage as managers Anderson and Slater increasingly fish for ideas in the private sector.
The trust held 49 unquoted companies at the end of March, according to its latest factsheet, which in aggregate accounted for 19.5% of total assets.
By contrast, its top 10 holdings, which include Tencent (6.2%), Illumina (5.9%) and semiconductor ASML (5.1%), represented 45.3% of the total portfolio at the end of the period.
During a webinar earlier this year the managers dismissed notions Scottish Mortgage was too big to take meaningful stakes in unquoted companies and revealed they had been finding more inspiration for potential investments in China than Silicon Valley.
But since then Scottish Mortgage’s shares have been rattled after fears of rising inflation sparked a rotation to value stocks. In March it was trading at an 11% discount but this has since narrowed to 2.3% thanks to a rebound in growth stocks and board-initiated share buybacks.
