The portfolio manager of Seraphim Space (SSIT ) investment trust has described the year ahead as ‘pivotal’ for the unloved global space sector as it faces a transformative shift driven by nations’ turn to space to enhance their defence capabilities. 

Writing in a monthly update, Mark Boggett said the pursuit of space sovereignty – from sending astronauts to orbit to fostering domestic launch capabilities – would define 2024, creating a new realm of ‘astro politics’ which will foster growth and innovation.

He added that investor sentiment for the sector rested on the performance of Elon Musk’s private company SpaceX, particularly the mooted listing of satellite company Starlink, which it operates.

‘As 2024 unfolds, the space sector will commence new groundbreaking achievements, unlocking growth through return-to-Earth capabilities, microgravity research and a global resurgence in private investment led by private equity investors, sovereign wealth funds and climate/impact-related investors,’ he said.

Portfolio update

Companies within the £229m portfolio were busy at the end of 2023. 

HawkEye 360, which maps and monitors land and water, acquired RF Solutions from Maxar Intelligence, meaning it now owns two further radio frequency (RF) satellites. The company makes up 9.5% of the £97m trust.

Thermal dataset company SatVu, a 6.4% holding, announced that one of its satellites had suffered an anomaly in orbit, which is expected to impact ongoing operations. The satellite was fully insured and the company is already in advanced discussions around the launch of its second satellite.

Shareholder returns for the trust in 2023 were choppy, with hopes of interest rate cuts leading to two rallies, but investors still suffering a 12% decline overall. The shares currently trade at 42.6p, a 66% discount to the June NAV of 96.51p per share, well above the 26.1p low of July.

Killik and Co’s Mick Gilligan said the revenue growth of most of the SSIT unquoted holdings looked healthy, which should drive a rerating of the shares over time. However, given it is unable to raise more capital on account of the discount, it won’t be able to make follow-on investments, causing issues. 

‘If the discount persists for a long time, and starts to hamper the ability to meet follow-ons, pressure will build to address it. The managers could always look to make some partial exits to help “prove-up” the NAV. However, it is still very early days.’

At the end of June, £29.7m of cash sat on the balance sheet, equivalent to 13% of assets.

Performance since launch 

Source: Morningstar