Scottish Mortgage is set to receive a boost from its largest unlisted holding which is on track to become one of the biggest IPOs of 2020.
Ant Financial announced on Monday it was planning to list in Hong Kong and Shanghai later this year, although it did not present a timeline or pricing for the IPO. In 2018, the fintech company was valued at $150bn after a funding round that raised $14bn from investors, including Baillie Gifford.
Investment trust analysts at Stifel said the the IPO would mostly benefit sentiment towards Scottish Mortgage. The holding is the twelfth-largest in the portfolio and represents 2.5% of net asset value.
“Whilst these gains are not material to NAV, we do think that if an IPO such as this occurs, it will be helpful for sentiment to Scottish Mortgage’s unlisted investment strategy,” it said in an analyst note.
“Based on past experience of portfolio companies that have IPO’d, we would expect Scottish Mortgage to retain much, or indeed all of its holding following any stock market listing.”
Scottish Mortgage has previously used Ant Financial as an example of how relationships can be a source of investment opportunities. The investment trust’s initial investment in Alibaba, which owns Ant Financial, allowed James Anderson and his team to invest in the fintech business.
In its annual report, Scottish Mortgage noted Ant Financial handles a multiple of the daily transactions each day that Visa does, even though payments is only one of five financial services it offers. “Were Ant to be listed on the London Stock Exchange (LSE), it would be the largest company in the FTSE 100 based on its size,” the report said.
Scottish Mortgage accounts from 31 March show the investment rose 9% over the year from £191.9m to £209.2m.
