Scottish Mortgage Investment Trust brands Facebook and Alphabet as yesterday’s investments


Scottish Mortgage Investment Trust PLC (LSE:SMT) has raised roughly GBP200mln by issuing two long-term, fixed-rate, senior, unsecured private placement notes.

The first is a 15-year note for GBP100mln with a fixed coupon (interest rate) of 2.03%, the second, a 25-year note for GBP100mln with a fixed coupon of 2.30%. Both notes are denominated in sterling and funded on 10 August 2021.

The cash has been raised to maintain what the board believes is an appropriate level of gearing – the ratio of debt to equity – of its portfolio.

“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,” said Justin Dowley, the senior independent director of Scottish Mortgage.

“The board continues to view the capacity to do this as one of the significant advantages of Scottish Mortgage’s investment trust structure,” he added.

Catharine Flood, the corporate strategy director for Scottish Mortgage said the company would continue to invest in what it believes will be the next generation of disruptors rather than the titans that caused the last technological revolution.

“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 (NASDAQ:ILMN) and Moderna are our two largest holdings, rather than Amazon or Tesla,” she said.

“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,” Flood said.


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