Seraphim Space Investment Trust has sold its stake in all nine of its early-stage companies to a new venture capital fund managed by Seraphim.
Seraphim Space has been the best-performing investment trust throughout 2024, having returned 60 per cent since the beginning of the year.
Its managers have frequently noted that its portfolio contained some legacy early-stage holdings inherited from a predecessor fund, which wasn’t in line with its strategy of growth-stage investing.
The new venture capital vehicle, Seraphim Space Ventures II LP, will be managed by Seraphim Space Manager LLP.
The managers said the new company would invest in around 30 Seed and Series A stage businesses in areas such as using AI in satellite data and scientific experiments in the microgravity of space.
Its backers reportedly include companies like Airbus, and it has a target size of over £70m.
The £3.8m price tag paid for the stakes sold to the venture fund came from independent valuation agent Azets. The trust originally made the nine investments for £3.5m. The holdings will be exchanged for a stake in the venture fund.
The trust said the deal would be a “one-off transaction” and represented 100 per cent of its commitment to the venture fund. It added that it would not “incur any management fees or be subject to carried interest as a limited partner in the venture fund.”
Winterflood analyst Shavar Halberstadt said these problems seemed to have now “been addressed” as it allows the portfolio to be de-risked by diversification through future additions to the space venture portfolio.
“In our view, the trust’s addressable market is extensive, with growing demand in areas such as cybersecurity, defence spend and climate change,” said Numis analysts Gavin Trodd and Ewan Lovett-Turner.
Despite the strong growth of the space trust this year, Trodd and Lovett-Turner believed its shares still “remain cheap on a 42 per cent discount”.
“The fund benefits from a team that is well engrained in what is a nascent sector, and their expertise helps to provide access to an extensive pipeline of dealflow,” they said.
“We regard the prospect of an in-house venture pipeline complementing both the Seraphim accelerator and the trust as a supportive development, provided that the team has sufficient resources in place,” added Halberstadt.