Schroders Capital Global Innovation Trust plc

Q3 2024 Quarterly Net Asset Value and Continuation Vote Arrangements

Schroders Capital Global Innovation Trust plc (the "Company") today announces its net asset value ("NAV") as of 30 September 2024.

Summary

·      As of 30 September 2024, NAV per share stands at 20.14p, a decrease of 4.0% relative to the NAV per share as of 30 June 2024 (20.99p).

·      Performance over the quarter was positively impacted by the revaluation of Revolut following news of its UK banking licence approval and secondary share sale providing liquidity for employees at a $45 billion valuation.

·      Performance over the quarter was negatively impacted, as previously disclosed in the Company's interim report and financial statements for the six months ended 30 June 2024, by downwards valuations to Ada Health and Bizongo, and the full write-off of Reaction Engines which entered administration.

·      During the quarter, the Company made £9.5 million of further realisations of Oxford Nanopore Technologies, benefitting from strong share price performance.  

·      The Company made £7.5 million of investments, including a new investment in "AI Company III"¹, and the final tranche of the initial investments in "AI Company II"¹ and Life Sciences portfolio company, Araris Biotech.

·      As of 30 September 2024, the Company had £29.2 million in cash and money market (sterling liquidity) funds and £8.9 million in liquid public equity investments^² to meet the funding requirements of the existing portfolio and execute the buyback programme.

·      The Company is on target with its share repurchase programme for 2024 in order to meet its 5% commitment for the year. As of 30 September 2024, the Company had repurchased 35,240,000 shares for cancellation during the year, with a further 2,760,000  shares repurchased for cancellation as of 31 October 2024.

·      The Board has determined, following a shareholder consultation exercise, to bring forward the continuation vote in order to provide clarity on the future of the Company at the earliest opportunity.

¹Actual name not disclosed due to confidentiality. ² Excluding BenevolentAI which is fair value priced by the AIFM.

Performance

The NAV as of 30 September 2024 was £165.6 million, a decrease of 4.9% compared to the NAV (£174.1 million) as of 30 June 2024. The NAV per share as of 30 September 2024 was 20.14p, a decrease of 4.0% compared with the NAV per share (20.99p) as of 30 June 2024. The difference between the NAV and NAV per share decrease is due to the share buybacks during the period.

The notable detractor from performance over the quarter was in the Company's growth holdings, which saw a fair value loss of 10.1%, contributing a 4.3% decrease to the overall NAV. This was primarily due to a fall in value in the holdings in Bizongo and Ada Health.

The valuation of Bizongo was reduced during the quarter to reflect near-term growth expectations following a recent restructuring of its business lines.

Ada Health recorded significant revenue growth between 2020 to 2023 and reached EBITDA level profitability in 2023, driven by new large contract wins. On this basis, the investment was written up in Q2 2024. However, during Q3, the business growth outlook has become more uncertain driven by a challenging market environment, resulting in a downwards valuation during the quarter.

On the positive side, following its strong 2023 financial results released earlier in the year, Revolut announced two important updates. Firstly, the company received its UK banking licence with restrictions from the Prudential Regulation Authority, the regulator responsible for overseeing the UK banking sector, to complete the build out of their UK banking operations. Subsequently, the company announced a secondary share sale providing liquidity for employees at a $45 billion valuation. In November, the company also announced the significant milestone of surpassing 50 million global customers in 28 markets - an impressive feat over 9 years.

The Company's venture holdings also saw a fair value loss of 10.3% (net of capital activity), contributing 2.1% to the overall NAV decrease. This was mainly driven by Genomics due to a downwards revaluation based on a slight delay in the commercial rollout.

The life sciences portfolio remained broadly stable during the quarter.

The Company's public equity holdings saw a fair value gain of 26.3% (net of capital activity), offsetting the overall NAV decline in the private portfolio by 2.4%. This was driven by Oxford Nanopore Technologies, which, during the quarter, experienced a share price increase of 69.1%. Oxford Nanopore Technologies published its half year trading update detailing underlying year-on-year LSRT revenue growth of 12.4%, lower than the annual target of 20-30%, although in-line with the company's expected phasing, with 2024 and longer-term guidance unchanged. In August, the company also announced the completion of an £80 million equity issue led by strategic investor, Novo Holdings A/S, the investment company responsible for managing the assets and the wealth of the Novo Nordisk Foundation. No specific use of proceeds was disclosed, only to strengthen the company's financial position and provide further headroom to implement the business plan through breakeven in 2027 or 2028.

Foreign Exchange

During the quarter, the fair value of investments denominated in the Euro (EUR) and US Dollar (USD) were negatively impacted by the appreciation of British pound sterling (GBP) relative to these currencies.

Cash, debt, and net current assets

As of 30 September 2024, the Company held £29.2 million in cash and money market (sterling liquidity) funds.

Investment activity

Realisations

During the quarter, the Company made realisations of equity positions totalling £9.5 million, almost exclusively from further reducing the holding in Oxford Nanopore Technologies.

Investments

During the quarter, the Company made investments totalling £7.5 million. This comprised of: a new Venture investment of £3.9 million in "AI Company III" ¹, a developer of proprietary generative AI foundational model for software development; a tranched investment in Araris Biotech, a Swiss oncology biotech company developing next-generation antibody drug conjugates, as agreed when the initial investment made in 2022; and the second tranche of the new Growth investment in "AI Company II"¹, a business that provides high-quality data curation services for generative AI models and application developers, as agreed when the initial investment was made earlier this year.

 ¹Actual name not disclosed due to confidentiality.

Top 10

The Company's top 10 holdings as of 30 September 2024 compared with the respective value and percentage weighting as of 30 June 2024.

Continuation Vote

The Company has committed to hold a continuation vote at its 2025 Annual General Meeting, which is currently scheduled for May 2025. The Board has determined, following a shareholder consultation exercise, to bring forward the continuation vote in order to provide clarity on the future of the Company at the earliest opportunity. The Company will make no further new investments pending the outcome of this continuation vote, although further investment in existing holdings is permitted, subject to Board approval.  If the continuation vote does not pass, it is proposed that the Company will enter into managed wind-down with any cash proceeds from realisations being returned to shareholders over time. Any managed wind-down will reflect the illiquid nature of the portfolio, with realisations being made at an appropriate time in the life cycle of each investment in order to maximise returns for shareholders. It is expected that a circular will be posted to shareholders in January 2025, containing further details of the continuation vote and the nature of any managed wind down, should the continuation vote not pass.

Outlook

Over the past quarter, the Portfolio Manager has continued to make realisations which has placed the Company with a healthy cash and money market funds balance.

Despite facing some short-term headwinds, which are to be expected with long-term venture capital investing in early-stage companies, the Portfolio Manager is confident in the outlook of the new investment portfolio that has started to take shape.

The result of the continuation vote to be held shortly will provide clarity over the future of the Company and enable the Portfolio Manager either: (i) to use the Company's available resources to continue to build a diverse portfolio of private investments; or (ii) to focus on managing the existing portfolio with a view to maximising the returns for shareholders and returning capital over time.

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. The securities shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell.

Enquiries:

Schroder Investment Management Limited