Space trust waits for defence boom to put a rocket up the shares

The manager of a London-listed investment company focused on military applications in space said it was “incomprehensible” that investors had failed to buy in to the company after the announcement of huge increases in defence spending.

Mark Boggett, who manages Seraphim Space Investment Trust, said that while other defence-related stocks had enjoyed large boosts to their share prices, the Seraphim price had hardly budged. “We are doing everything we can to trumpet our potential,” he said. The SSIT share price started to react on Thursday, adding 2¼p, or 4.2 per cent, to close at 55p, valuing the company at £134 million.

Boggett said 78 per cent of Seraphim’s net asset value was invested in companies either wholly or partly in defence-related activities. Its biggest investment is in Iceye, which operates constellations of radar satellites that can produce high-resolution images at night and in any weather and is being used by the Ukrainian military.

Other big defence-related investments included Allspace, which supplies antennae capable of receiving signals from multiple satellites at the same time and could play a part in navigation when alternative GPS systems are jammed.

Another interesting investment, he said, was D-Orbit, which had developed a rocket-within-a-rocket system to put satellites used by the military into space.

Seraphim reported a 6.8 per cent increase in net asset value per share to 101.04p in the year to December. Valuations of the companies it has invested in remained “robust”, it said.

However, it was still trading at a yawning discount to net assets of 46.2 per cent at the year end though this was down on the 63.3 per cent discount of a year earlier. Boggett said it was “a sad reflection” of the UK investment trust market, where discounts are widespread, liquidity thin and investors risk averse.”
Investors in Seraphim include Sir Richard Branson and British taxpayers through a stake held by the British Business Bank.

Boggett was hopeful of a pick-up in exits for the company, which needs to raise cash to fund follow-on investment in its more promising portfolio companies. “We believe there is going to be considerable M&A activity in the year ahead,” he said. Cash now stands at £23.5 million, with another £14 million in liquid listed stocks.

European governments including the UK have announced huge increases in defence spending since President Trump’s humiliating dressing-down of President Zelensky, which was seen as signalling a break with the old order in Nato.

Shares in defence companies have rocketed, with BAE Systems up 27 per cent in the past month. Paris-listed Eutelsat Communications has quadrupled in two weeks on speculation it could be used as an alternative to Space X’s Starlink service in Ukraine.

Seraphim initially raised £180 million from investors at 110p per share in 2021, when excitement over space technology was at its height.