(Alliance News) - Scottish Mortgage Investment Trust PLC on Wednesday said it raised a further USD400 million in long-borrowings to enable the trust to invest in more companies and increase its stake in firms that are growing.
The Edinburgh-based investment trust said that as its assets have grown, the company increased its absolute level of borrowings to maintain what it considers an "appropriate level of gearing of the portfolio".
The company has stakes in technology stocks such as electric car maker Tesla Inc and chip maker Nvidia Corp.
It expects the borrowings to enhance returns to shareholders over time and allow it to back more transformational growth companies, as well as enable it to increase its stakes in companies that are "making considerable progress".
Scottish Mortgage, therefore, raised USD400 million in long-term, fixed-rate, senior, unsecured private placement notes.
This new private placement agreement includes the issuance of one 30-year USD175 million note with a fixed coupon of 3%, a USD110 million 35-year note with a fixed coupon of 3.0% and a USD115 million 40-year note with a fixed coupon of 3.1%.
All coupons will be payable annually and the funding date for all three tranches was yesterday, the company said.
Banco Santander SA acted as the placement agent for the transaction.
"Once again, the company has issued long-term private placement debt at attractive rates. This is reflective of the enduring strength of Scottish Mortgage's proposition and should enhance shareholders' returns over the coming decades. The board wishes to thank Baillie Gifford, Santander and others for their diligence and hard work on this," Chair Fiona McBain said.
Shares were up 1.3% at 1,132.00 pence each on Thursday morning in London.
By Abby Amoakuh; abbyamoakuh@alliancenews.com
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Scottish Mortgage (SMT)