Scottish Mortgage Investment Trust, the £15.2 billion FTSE 100 stalwart popular with UK retail investors, is asking its shareholders for greater freedom to navigate the increasingly complex world of private company investing. The trust’s board will put a proposal to a shareholder vote next month, a move directly triggered by the runaway success of its own star holding: Elon Musk’s SpaceX.
The £250 Million Flexibility Clause
At a general meeting on 10 April 2026, shareholders will decide on a change to the trust’s investment policy. Currently, Scottish Mortgage is restricted from investing more than 30% of its total assets in private companies—those not listed on a public exchange. The new proposal would grant the board discretion to approve up to £250 million in additional investment capacity, allowing managers to buy into new or existing private companies even if doing so temporarily pushes the trust’s exposure above that 30% ceiling.
Tom Slater, manager of the trust at investment firm Baillie Gifford, stated the move was about being a “patient, long-term partner” to growth companies. “From time to time, market movements can restrict our ability to make further investments,” he said, adding that the proposal gives the board “additional flexibility to act in shareholders’ long-term interests.” If approved, this flexibility will be subject to annual renewal by shareholders from the 2027 AGM onwards.
SpaceX: The Success That Forced a Rethink
The immediate catalyst for this rule change is the staggering appreciation in value of SpaceX, Scottish Mortgage’s largest single holding. The trust first invested $200 million in the space exploration firm in 2018. By January 2026, that stake was worth approximately $3.3 billion.
Critically, a major “trigger event” occurred on 16 December 2025, when a secondary share sale sharply adjusted SpaceX’s valuation upwards. Overnight, SpaceX’s weighting in Scottish Mortgage’s portfolio jumped from around 8.2% to between 15.1% and 15.3% of total assets. This single revaluation, achieved without the trust buying a single new share, consumed over half of its entire permissible 30% allocation to private companies.
When combined with its third-largest holding, TikTok owner ByteDance—which accounts for a further 4.1%—the trust found its scope for new private investment severely constrained. ByteDance itself exemplifies the growth potential in the portfolio; Scottish Mortgage invested in 2019 when it was valued at $75 billion, and by April 2025 noted its valuation was $300 billion.
The Inherent Challenge of Valuing Private Assets
This situation highlights a core challenge for any investor in private markets: valuation. Unlike publicly traded stocks, whose prices update by the second, private company valuations are infrequent and event-driven. They are typically reassessed during funding rounds, secondary sales, or, ultimately, an IPO.
Baillie Gifford uses a formal process, with a valuations committee taking advice from independent third parties like IHS Markit or S&P Global, reviewed monthly on a rolling cycle and audited annually. However, significant “trigger events” can cause immediate adjustments, as seen with SpaceX in December.
The result is a potential lag and disconnect. A portfolio’s private holdings can appear stable during public market falls, inflating their proportion, or can surge in stated value overnight due to a single corporate action, breaching internal limits purely through success. With SpaceX reportedly targeting a potential IPO later in 2026 at a rumoured $1.5 trillion valuation, this pressure is unlikely to abate.
Broader Strategy and Market Reception
The proposed change has been broadly welcomed by analysts. Alex Trett of Winterflood Securities called it a “sensible approach as it avoids constraining the manager as a result of the success of its marquee assets.” Matthew Hose and Fiona Huang, equity analysts at Jefferies, described it as “a pragmatic solution” and maintained a ‘Buy’ rating on the trust.
The trust’s board stated the proposal followed consultation with a broad range of shareholders. It reflects a longer-term trend of companies staying private for longer, seeking capital from investment vehicles like Scottish Mortgage which, as a closed-ended trust, is structurally better suited to illiquid assets than open-ended funds.
Scottish Mortgage’s history with private equity is well established. Its allocation has fluctuated near the limit, from 28.7% in June 2022 to around 26% in late 2024. Its activity, including an estimated £2 billion spent on share buybacks between April 2024 and May 2025, can also affect the relative weighting of private holdings within the portfolio.
The trust, an “AIC Dividend Hero” having raised its payout for 41 consecutive years, frames the vote as essential for maintaining its philosophy of “investing in progress.” The goal is to ensure that a self-imposed rule, designed for prudence, does not prevent it from supporting the very companies it was built to back in their most capital-intensive phases of growth.
