Seraphim Space Investment Trust has put its IPO funds to work, funnelling £7.7m into unlisted investments at a precarious time for markets.
The £250m trust was 75% invested and had £62.3m in cash by the end of March, eight months after its £150m listing on the London Stock Exchange.
Cash levels have since fallen to £57.7m after it snapped up three new unlisted investments worth £5.3m in the second quarter and made two follow-on investments totalling £2.4m.
Seraphim Space primarily targets early and growth stage private space tech businesses, which are “category leaders with first mover advantages” in areas spanning climate, communications and cyber security.
While other trusts in the Growth Capital sector have been holding off on making new investments, Seraphim Space said most of its companies have sufficient cash to stay afloat for at least another year.
Despite the challenging macro-economic backdrop this year, appetite for space-related investments has not slowed. Total private funding was $12.2bn in the year to 30 June 2022, which was broadly in line with the previous calendar year.
“The last six months have demonstrated the crucial role space plays in global defence, food security and humanitarian support as well as addressing longer-term climate and sustainability solutions,” Mark Boggett, CEO of Seraphim Space Manager, said.
Top holdings battered in Spac sell-off
But, like most of its peers, Seraphim Space has been caught out by the growth sell-off and now trades at a massive 31% discount. Shares have plummeted nearly 40% year-to-date, to hit 75p and are down 28% from their listing price of 105p last July.
Seraphim Space admitted three of its companies “may require additional funding” before June 2023 but added two are close to securing additional financing that would extend their runway beyond this. The other, Altitude Angel, would need to raise new funds before the end of Q2 next year.
The trust said it would use two thirds of net cash to support the next funding rounds of its portfolio companies, including Altitude Angel, through to 23 December. The rest will be used on new investments.
Arqit Quantum and Spire Global, its two quoted companies, have suffered staggering share price falls this year, with the former down 74% and the latter 59%.
The holdings, which account for 14.3% of NAV at the end of March, became listed after merging with special purpose acquisition companies (Spacs), which investors have been abandoning in droves.
Seraphim Space said it remains “confident in the prospects for both companies”, noting both reported positive commercial performance.
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