Scottish Mortgage Investment Trust PLC raises long-term borrowings of £200 million

Scottish Mortgage Investment Trust PLC raises long-term borrowings of £200 million

Justin Dowley

The Scottish Mortgage Investment Trust PLC, a company managed by Baillie Gifford, has raised a further c.£200 million by issuing two long-term, fixed-rate, senior, unsecured private placement notes.

The first is a 15-year note for £100m with a fixed coupon of 2.03%, the second, a 25-year note for £100m with a fixed coupon of 2.30%. Both notes are denominated in sterling and funded on 10 August 2021.

As Scottish Mortgage’s assets have grown, the board has increased the absolute level of the borrowings for the company in order to maintain what it believes to be the appropriate level of gearing of the portfolio.

In line with the gearing policy and guidance provided in the company’s Annual Report, the Board remains committed to the strategic use of borrowings for the company in this way, with the aim of enhancing returns to shareholders over time, in line with Scottish Mortgage’s distinctive investment philosophy and disciplined long-term approach.

Banco Santander S.A. London acted as the placement agent for the transaction.

Justin Dowley, senior independent director, Scottish Mortgage Investment Trust PLC, said: “I am pleased to report that once again the company has issued long-term private placement debt at attractive rates. The ability to raise long-term capital in this way to invest in the outstanding growth companies in the portfolio should enhance the returns for our shareholders over the coming decades. The board continues to view the capacity to do this as one of the significant advantages of Scottish Mortgage’s investment trust structure. The board wishes to thank Baillie Gifford, Santander and others for their diligence and hard work on this.”

Catharine Flood, corporate strategy director for Scottish Mortgage, added: “Over the last decade, Scottish Mortgage’s portfolio has included many companies positioned well for the long term shifts in the way we live, work and travel, benefitting from the explosion of social media, online shopping and electric transport.

“The computing power behind this disruption is accelerating and now reaching other industries where we expect the advances to be even larger and more meaningful - such as healthcare, transport, space exploration and biological manufacturing. The exciting progress we are seeing is reflected in the changing shape of our portfolio. Today we no longer invest in Alphabet or Facebook, and Illumina and Moderna are our two largest holdings, rather than Amazon or Tesla.”

“Raising new capital at this point allows us to back more of the next generation of innovative companies without having to sell current investments which we continue to find attractive. The new funding allows the managers to invest more in the portfolio, with the aim of enhancing long-term returns for shareholders.”

Share icon
Share this article: