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of at least €500 million. This
broadens the opportunity to invest
to about 1,150 companies.
Over the next two to three years,
we also expect to invest in unlisted
companies valued at a minimum of
€500 million, enabling us to invest
in Europe’s most exciting growth
companies, listed or not. However, we
will not invest more than 10 per cent
of the trust’s portfolio in these private
companies.
We are not looking to invest in
embryonic businesses or ideas, but
in established businesses choosing to
remain private for longer. Businesses
like these tend to be asset-light and do
not require much capital, while owners
TRUSTNET
[ BAILLIE GIFFORD ]
16 / 17
We are not looking to invest
in embryonic businesses
or ideas, but in established
businesses choosing to
remain private for longer
often find it is easier to create long-term
value without short-term shareholders.
Baillie Gifford has been investing in
unlisted companies since 2012.
We believe that unlisted companies
like these are better held within the
structure of an investment trust than
a fund. Our shareholders can trade in
the trust’s shares at the market price
whenever they wish, while the closed-
end structure of an investment trust
means that there is never any need for
us to sell any of our holdings to fund
redemptions.
So far, only around 10 per cent of the
world’s unicorns – private companies
valued at over $1 billion – have come
from Europe, so it still has some
catching up to do. Yet when we speak
to companies in Berlin and Stockholm,
we can see that the mindset is
changing.
The trouble with Europe
Investors may be cautious about
investing in Europe. Economic growth
is uninspiring, its politicians even
more so. Europe lacks a technology
giant, and its lacklustre stock market
is dominated by large, bureaucratic
multinational companies in sectors
such as financials, consumer staples
and even healthcare. We are not
buying those companies, however.
We are investing in a small number of
innovative, proactive companies that
happen to be domiciled in Europe.
Looking at the European market
over the past 30 years, it is niche
industrial businesses that have
delivered the best returns, companies
such as ASML, whose lithography
systems allow light to be projected
through patterns to make blueprints
for manufacturing semi-conductor
chips, or Beijer Ref, whose
environmentally-friendly fridges and
freezers play a key role in reducing
CO2 emissions in supermarkets and
other commercial premises.
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