Selling unquoted stocks could take time, warns winding-down Keystone

Keystone Positive Change says its four remaining private companies are unlikely to be sold before a merger with the larger Baillie Gifford Positive Change sister fund.

Keystone Positive Change (KPC ) has told shareholders that its unquoted holdings are unlikely to be sold before the investment trust merges with its sister Baillie Gifford Positive Change fund, delaying the full return of their money if they opt for cash.

The £159m Baillie Gifford global equity trust said that after the recent disposal of Boston Metals, there were four remaining unquoted companies accounting for 2.6% of net assets that could not be rolled into its £1.8bn open-ended stablemate.

This includes the recently bankrupt Swedish battery maker Northvolt, which the board has written down from 1.9% to 0.04% since March, carbon-removal company Climeworks, quantum computing business PsiQuantum and biotech firm Spiber.

‘Any net proceeds from the disposal of the illiquid investments during the liquidation period would be returned to ordinary shareholders in due course,’ the firm said. ‘However, there can be no guarantee as to the value, if any, and/or timing of distribution(s) that may result from the realisation of the company’s remaining illiquid Investments. Both of these factors will depend on, among other things, prevailing market conditions.’

The board announced in September a plan to merge Keystone with the Positive Change fund as the trust remained sub-scale with its shares illiquid and trading at a wide discount after a difficult three years for ESG and growth investments.

Assuming the resolutions pass at the two general meetings on 27 January and 7 February, shareholders who do not want to invest in the Positive Change fund can sell their stakes at a 1% discount to net asset value.

Baillie Gifford has waived all management fees after 7 February as it tries to realise the private assets. 

Shares in the trust fell 1.7% to 253.7p on Friday morning when the update was made, putting them on a 6% discount that has narrowed from a one-year average of 10.6%.

Keystone, which Baillie Gifford converted from a UK equities trust after winning the mandate from Invesco, invests in companies that make a positive social or environmental impact.

In retrospect the timing of its relaunch in February 2021 was poor. After peaking close to an all-time high of 358p in September that year, the shares slumped to 177p the following June as rising inflation and interest rates took their toll and energy stocks rallied after Russia’s invasion of Ukraine. They then traded sideways for 16 months before beginning to recover from 183p in October last year.