A rumoured sale of SpaceX shares at a bumper valuation could boost the value of Baillie Gifford’s flock of tech-heavy investment trusts, and maybe even help tackle their enduring discounts.

Reports are rife that Elon Musk’s space rocket and satellite company is set to sell $1bn (£740m) of employee shares in a deal that would take its valuation to an out-of-this-world $400bn.

The group was valued at $210bn in mid-2024 but this soared to $350bn in December as it undertook a tender offer, cementing its place as one of the most valuable private companies in the world.

The repurchase of shares values them at $212 each, according to reports. That represents a 14% increase on the end of last year and will be a boon for Baillie Gifford, which has been a major backer of SpaceX – and Elon Musk’s companies in general – via its investment trusts.

SpaceX, or Space Exploration Technologies as it is formally known, is the top holding in Baillie Gifford flagship Scottish Mortgage (SMT ), where it made up 7.2% of the £13.2bn portfolio at the end of May. The rocket-ship company also takes the top spot in smaller, but no less tech-focused, Edinburgh Worldwide (EWI ), where it represents 13.4% of the £694m trust.

Baillie Gifford US Growth (USA ) had 11.1% of its £777m portfolio invested in SpaceX at the end of May. The £1.1bn Schiehallion (MNTN ) trust has also invested 9.1% of its portfolio in the group, making SpaceX its second largest position.

Numis, which acts as a broker for both SMT and EWI, estimated this would drive an increase in net asset value (NAV) of 1% and 1.9%, respectively, based on a $400bn valuation. Meanwhile, USA would see a 1.3% uplift and Schiehallion 1.5%.

The increase in valuation could have a significant impact on the trusts’ NAVs and eventually help free them of their persistent discounts, which opened up after a downturn in investor sentiment towards growth stocks  in recent years, as well as mixed performance. 

SMT has lingered on a 9.5% discount, EWI is trading at a discount of 6.6%, USA is sitting at a discount of 10.5%, and MNTN is the most heavily discounted at 18%.

MNTN is entirely focused on unlisted companies and the other three trusts invest heavily in unlisteds, making up 25% of SMT, 29% of EWI, and 35% of USA. Despite a wider boom in private equity, the kind of fast-growing private businesses the Baillie Gifford trusts focus on have been hit by higher interest rates that increased the cost of borrowing and fuelled concerns that valuations were overly optimistic.

Baillie Gifford isn’t the only fund manager boarding SpaceX. It also features in RIT Capital Partners (RCP ), where it was 0.7% of NAV at the end of December. Manager Maggie Fanari added a position in mid-2024 meaning the trust will have benefited from two uplifts in valuation since then.

Bloomberg first reported that SpaceX plans to launch a primary fundraising round through which it would sell a small number of new shares, alongside employee and early investors’ shares in a secondary offering, with the price determined by the primary round.

The news outlet cited growth in the Starlink satellite internet division, which accounts for more than half of revenues, for the higher valuation, as well as its rocket programme Starship hitting key milestones, including its ninth test flight that involved the first ever reuse of a ‘super heavy’ booster.

As well as SpaceX, Baillie Gifford has been a long-term backer of Tesla, although its funds have cut back their positions in the last year on valuation concerns.