To the moon? Investors can have a slice of the space tech industry as a new investment trust targeting 20% annual returns plans London float
- Seraphim Space Investment Trust has announced its intention to float in London
- It will be the world’s first investment trust focused on space technology
- ‘This is a space industrial revolution’, ex-Virgin Galactic boss and chair of the trust, Will Whitehorn says
The world’s first investment trust focused on space technology is set to float in London, giving everyday investors the opportunity to tap into what is predicted to become a trillion-dollar market.
Seraphim Space Investment Trust will invest in a portfolio of early and growth stage space tech companies.
The newly-established trust will be managed by Seraphim Space, which runs with the strap-line on its website of ‘science fiction to science fact,’ and is targeting an ambitious total annual investment return of 20 per cent.
Seraphim claims to be the world’s number one space tech investor and boasts a large portfolio of more than 50 space-related companies.
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The new trust will acquire a portfolio of 19 seed assets from the Seraphim Space Fund.
This already includes stakes in a handful of unicorns – a company valued at more than $1billion – such as Arqit, Spire Global and AST & Science.
‘There is nothing short of an industrial revolution underway in the space sector,’ Will Whitehorn, chair designate of the trust and former Virgin Galactic boss said.
‘Space Tech is forecast to be a multi-decade, trillion-dollar investment market that has not previously been available through listed opportunities.
‘We are excited to offer investors access to a diversified portfolio of some of the sector’s highest growth-potential companies.’
Morgan Stanley estimates the global space industry could generate revenue of more than $1trillion or more in 2040, up from $350billion currently.
What is it investing in?
It will initially have 19 seed assets, including:
AST & Science, a satellite broadband specialist listed on the Nasdaq. It is building a network of satellites, known as a constellation, that is designed to deliver broadband from space directly to smartphones.
British start-up Arqit, an encryption specialist and offers companies new technology to avoid cyber attacks. It has been backed by funding from the Government and plans to merge with a special acquisition company.
Spire Global has built a network of nano-satellites that orbit just above the Earth’s atmosphere to collect data. In March it also announced plans to go public through a merger with a special acquisition company.
Despite the global economic turmoil of the last year, 2020 saw the biggest private investment in space to date, and this year is likely to follow suit.
However, space-related investments are still at an early stage and will need multiple funding rounds before reaching maturity.
This makes it a high risk proposition but the investment trust structure is well-suited to the sector as it allows for a patient investment approach, Mick Gilligan, partner at investment house Killik & Co said.
‘It’s one for investors with high risk appetite and should really only constitute a very small part of an overall portfolio.
‘Seraphim, if it does successfully IPO, is likely to return on several occasions for more capital so there are likely to be more opportunities to invest in new shares further down the line,’ he added.
The Initial Public Offering will see shares issued at 100p each and it says a prospectus will be published within weeks.
There have been a series of high-profile IPOs in the past few months, including PensionBee, Deliveroo and artificial intelligence company Darktrace.
IPOs give everyday investors the opportunity to purchase shares of companies when they go public.
There has been a rush to invest in the space industry in recent years as Elon Musk, Jeff Bezos and Sir Richard Branson compete to be the first to offer human spaceflights.
Attention has also turned to the satellite industry.
Musk’s SpaceX – which high profile fund Scottish Mortgage Trust has a stake in – and UK-based OneWeb have recently launched small satellites into low Earth orbit.
‘The data captured by satellites can help us monitor and mitigate the effects of climate change and drive a more sustainable future,’ Seraphim chief executive Mark Boggett said.
‘Likewise, it is the connectivity delivered from space that will enable the three billion people still without internet access to get online.’
Boggett launched the fund in 2014 with colleagues from YFM Equity Partners, and since then has raised £70million from investors including the British Business Bank and Airbus.
The new investment trust has already received the backing of government as it ramps up investment in the sector in a bid to increase its share of the market.
‘This is a very exciting development for the space sector in the UK and around the world.
‘Seraphim Capital, with whom the Department for International Trade has long worked with, has already led the way in helping the sector access capital finance that contributes to the critical commercialisation of space technology and services,’ Lord Grimstone, minister for investment said.