Baillie Gifford has announced plans to launch a US investment trust investing in listed and unlisted growth companies, with a fundraise target of £250m.
The Baillie Gifford US Growth trust will be managed by North American equities team members Gary Robinson (pictured) and deputy managers Helen Xiong and Andrei Kiselev, who are also responsible for the open-ended £924m Baillie Gifford American fund alongside Tom Slater. This fund is up 88% over three years compared to 51% for the IA North America sector.
Initial investments in the trust are expected to be predominantly in listed securities, with a market capitalisation of at least $1.5bn, but exposure to unlisted securities, with pre-raise valuations of at least $500m, will increase over time.
Investing in this part of the market has become increasingly popular among closed-ended managers, as seen within the group's £6bn Scottish Mortgage investment trust managed by James Anderson and Tom Slater, who have been vocal about the opportunities to be found in the space.
The new US Growth trust will have a maximum of 90 holdings, with typically 30 to 50 of these in listed securities. The maximum investment in any one holding will be limited to 10% of the trust's total assets, and the maximum amount invested in unlisted securities will not exceed 50% of total assets (in each case measured at the time of investment).
The group said it is aiming to raise £250m by means of a placing and offer for subscription of ordinary shares for the trust. Details will be set out in a prospectus expected to be published in early to mid-March, and it is expected the issue will close before the end of next month.
There will be an ongoing annual management charge of 0.70% on the first £100m of the net asset value (NAV) of the company and 0.55% thereafter. Once launched, the trust will bear other ongoing operational expenses that will be included in its ongoing expenses and charges.
Commenting on the launch, the Baillie Gifford team said it believes the US is one of the most attractive countries for starting innovative businesses that may develop into exceptional growth companies.
It said: "The US is home to some very active and diverse entrepreneurial hubs, whose conditions and collective wisdom for creating innovative companies is unrivalled.
"For example, Silicon Valley has become a nexus for some of the world's most exciting technology companies, while Boston and San Francisco play hosts to deep concentrations of bio-technology companies operating at the vanguard of scientific advancement in their respective fields."
Commenting on the decision to look at unlisted companies, the team added: "This represents a structural shift in the nature of capital markets which is likely to persist in the long term. 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.
"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."
Manager Robinson (pictured) added: "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."
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