(Update) Baillie Gifford has issued a statement clarifying the decision to sell a third of Edinburgh Worldwide’s stake in SpaceX “was not made to facilitate a merger” with Baillie Gifford US Growth (USA).

Responding to questions asked by activist hedge fund Saba Capital, which has accused the board of Edinburgh Worldwide (EWI) of acting in Baillie Gifford’s interests, rather than its shareholders, the fund manager said the partial sale of the holding in Elon Musk’s rocket company was entirely a “portfolio management decision”. Saba today criticised its explanation as “thin”.

Meeting a deadline of Friday set by Saba, which has threatened to sue the board of EWI for taking profits in an increasingly valuable holding, the Edinburgh-based funds group said: “A portfolio management decision was made in May and completed at the first available liquidity window,” which chair Jonthan Simpson-Dent confirmed in a webinar this afternoon was during a SpaceX tender offer in October.

It said SpaceX had remained the trust’s largest holding after the sale, at 8.4% of the portfolio, a weighting that nearly doubled to 15.9% last month after the company’s valuation leaped from $400bn to $800bn as a result of the share sale by employees.

Baillie Gifford insisted there had been no co-ordination with USA or their sister private equity fund Schiehallion which also reduced their exposures to SpaceX.

“Concurrently, the portfolio managers for separate investment trusts, Baillie Gifford US Growth and The Schiehallion Fund, executed similar trades,” it said.

The investment partnership explained the decision to cut EWI’s holding in SpaceX was motivated by a desire to return capital to shareholders who had suffered big losses during the previous two years.

SpaceX had been an extremely successful investment for EWI shareholders returning £10,500 for every £1,000 invested to date.

Chinese walls

Simpson-Dent (above) expanded on this point in the online Q&A with investors on Friday afternoon saying it had been “hugely accretive” with Baillie Gifford’s initial £25m investment now close to £250m.

Addressing Saba’s strongest line of attack as the 30.7% shareholder seeks to remove the EWI board at a vote this month, Simpson-Dent said it was “complete nonsense” to link the SpaceX sale to the merger.

He said the decision to sell some SpaceX shares happened “way before” the talks with the USA board.

The “Chinese walls” in Baillie Gifford meant he had no idea what the USA managers were doing or vice versa.

He said the trust’s managers had told the board last May they were considering selling down some of the big private equity position in SpaceX to reduce EWI’s exposure to unlisted companies below a 25% limit.

“Yes, we took some profits in October. We had no visibility that there would be a further uplift in December – we were delighted with that uplift,” he said.

Saba said this was “impossible to believe” that Baillie Gifford and EWI had no idea that there would be an upward revaluation of SpaceX in December. “If they did not, then it reflects the incompetence of Baillie Gifford as manager,” it said.

The chair disclosed that the board had gone to Saba with three proposals in 2025 following the activist’s comprehensive defeat in its first attempt to remove the board last February. This included two large returns of capital to buy out Saba’s shares, and the merger with USA, which could have had the same effect. Saba rejected them all, he said.

That merger was now “off the table”, Simpson-Dent said.

“We love SpaceX,” he added, reiterating it was the trust’s “crown jewel” but admitting, “Going forward we will tread very carefully about future decision making” about the holding, having heard shareholders’ enthusiasm for the investment.

He urged shareholders to vote against Saba’s resolutions at the general meeting this month, saying that not to do so risked the hedge fund gaining control and changing the uniquely valuable portfolio that Baillie Gifford had established, which under its new “path for growth” had rebounded in the past year.

Saba countered by saying the comments “only deepen our concerns about whether the current directors can be trusted to act in shareholders’ best interests.”

“The significant level of detail in the board’s 2 December 2025 announcement clearly demonstrates that the board had discussed the merger with Baillie Gifford – at a minimum, regarding the fees of the combined company – and that they were not ‘kept at arm’s length’ as Mr Simpson-Dent claims.”

Our view

You can watch the whole of the EWI webinar through this link. QuotedData believes the investment trust’s shareholders should support the board at the vote on 20 January, but reminds investors that voting deadlines through platforms will be much earlier. Senior analyst Matthew Read explains in this article why Saba should not be allowed to gain control of this unique fund and how defending the trust for a second time in a year from the activist is a huge and unnecessary distraction for its board.