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222. Bull, Bear & Beyond – The Schiehallion Fund: executive interview
24 Plays6 days ago
In this interview, Lucie Majstrova, investment specialist for private companies at Baillie Gifford, discusses The Schiehallion Fund, which seeks to generate capital growth for investors through long-term minority investments in later-stage private businesses that it considers to have transformational growth potential and the potential to become publicly traded. Majstrova discusses the significance of the company’s recent change in its listing segment from the Specialist Fund Segment to the Main Market’s closed-ended investment funds category. She explains the main drivers of the Schiehallion Fund’s recent strong performance, as well as major operating metrics across its portfolio, such as revenue growth, profitability and cash flow profile. The discussion also covers The Schiehallion Fund’s approach to its holdings after they complete their IPOs, as well as the recycling of proceeds from listed holdings into new private market opportunities.
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Transcript
Introduction to Sheheleon Fund Discussion
00:00:08
Speaker
Hello and welcome to Edison TV. I'm Mirosz Paps, Director of Investment Trust Content at Edison, and today I'm delighted to be joined by Lucy Maestrova, who's Investment Specialist for Private Companies for Bailey Gifford.
Purpose and Strategy of the Sheheleon Fund
00:00:19
Speaker
We are here to discuss the Sheheleon Fund, which seeks to generate capital growth from long-term minority investments in later-stage private companies, which is believed to have transformational growth potential and the potential for a public listing.
00:00:36
Speaker
Lucy, many thanks for coming in today. no Thank you very much for inviting me.
Access to Exceptional Growth Companies
00:00:40
Speaker
Maybe we can start with you providing us some background on on the Schehellen Fund and its investment approach.
00:00:47
Speaker
So, ShareHaline Fund aims to provide its investors access to the world's most exceptional private growth companies. Now, private growth is a relatively new asset class. It really started emerging in 2010s as companies were dealing a listing, right? So, when Amazon went public in 1997 at a half a billion valuation or, you know, Tesla was going public at roughly two billion valuation.
00:01:13
Speaker
Then at in the 2010s, what we were seeing is companies delaying a listing. So that's how we started investing in the private markets in 2012 with our first investment in Alibaba. And then by 2019, we basically build up enough muscle and confidence in our ability to be very good at private growth investing to build a dedicated m private growth portfolio.
00:01:39
Speaker
And this is really how Shaheen was born. It was to solve a problem for our clients, a problem of completing essentially their growth portfolio with the companies that were now staying on the other side of the IPO line.
00:01:53
Speaker
Thank you. That's a very helpful introduction.
Market Maturity and Listing Shift
00:01:55
Speaker
Now, in December 2025, the Sheehen Fund changed its listing segment from the specialist fund segment to main markets close and then investment fund segment. So maybe you can talk us through the significance of this shift.
00:02:11
Speaker
Yeah, I think the, basically the shift is a part of part of the maturation of Chehalien as a fund, right? I see the last year is really completing this journey because in 2019, you know, the fund we did market it broadly, it was really offered just to a small number of our institutional investors. And even this sort of internal, I'm not sure what it's a joke or reality is that we named it Chehalien so that nobody can find it.
00:02:37
Speaker
It's just bit of a cryptic name named after Scottish mountain. And then when we raised capital in 2021, it was at the time that the UK wealth managers came on board. And now, you know, what was happening last year that the portfolio was getting fully invested and it was becoming a bit more clear about the shape of the portfolio is going to look like. So the board decided that it's becoming ready for a broader audience. The shareholders supported this view and it then became first just listed for general public, but then also became part of the on the of March of this year.
00:03:18
Speaker
Perfect, thank you. I'm sure that the the change in the listing segment will ah put the company on the radar of of more investors.
Performance Highlights and Investment Success
00:03:25
Speaker
Now, what I also wanted to talk about is um ah the company's recent strong performance with the NAV total return for the financial year to the end of January 2026 at 32.6%. So maybe you can tell us more about the main drivers behind this performance.
00:03:42
Speaker
Yeah, I think it's it's been you know it's been a very good year for us, but it's part of a broader story, right? Because let's say 2022 was a big reset in valuations for growth companies and private throw growth alike.
00:03:56
Speaker
And it was really flushed out some of the capital out of that market. there were some you know The previous boom was attracting different participants in the market, was driving valuations up. So this has really flushed it out. But you know unfortunately, this is also reflected in the performance for the fund during that time.
00:04:14
Speaker
But then you know what we are starting to see over the last two years is the maturation of some of the good investments we've made on the successful investments has really started pulling ahead and demonstrating the return asymmetry that is inherent to growth investing.
00:04:31
Speaker
So it's a bit of a setup to say basically over the last year, we've seen the biggest positions in the portfolio driving performance, right? So it was the likes of SpaceX where we've seen multiple revaluations. It's the likes of Bending Spoons, the Italian software acquisition company.
00:04:52
Speaker
It's really training m tse its acquisition machine on bigger and bigger targets and compounding growth at a very fast clip. So, know, we've seen progress there, both on the operational side and the valuations are reflective of that. But then, you know, also Antropic, a recent purchase.
00:05:09
Speaker
is really firing on all cylinders. So these are the, let's say the top companies, but underneath that, there is what we would almost call the next generation of winners, such as Vinted or Andurial, they've been all performing exceptionally well as well.
00:05:26
Speaker
Thank you so
Portfolio Growth and Profitability
00:05:27
Speaker
much. So touched upon the the strong operational performance. So maybe you can shed some light on main KPIs across your portfolio, such as revenue growth, profitability, and and the cashflow profile.
00:05:38
Speaker
Yeah, so when you look at the portfolio in total, the revenue growth, so the top-line growth of the portfolio is about two and a half times that of the NASDAQ 100. So NASDAQ 100 is very tech-heavy index.
00:05:52
Speaker
It includes Nvidia, which is really the main driver of and revenue growth in there. But this huge multiple of what you can see in this tech heavy public index is a really, it's a good benchmark for understanding what growth looks like on the private side, right? So it's a much faster growth, but it doesn't really come at a cost of fundamentals. About three, um actually about two thirds of the portfolio is profitable.
00:06:19
Speaker
And when you want to look at this sort of crush and cash outlook, about half of the portfolio is either public or core cash generative. And it's less than 20% of the companies in there have less than two years of cash runway.
00:06:34
Speaker
So it's very strong fundamentals coupled with very fast pace of growth. Excellent, thank you.
Post-IPO Strategy and Future Prospects
00:06:41
Speaker
And to be also helpful to understand the Shehelian Fund's approach to its um companies, which i mean after they IPO'd, right? And also the recycling of proceeds from listed companies into new private opportunities, which I think our listeners would be interested in, especially in the context of the upcoming SpaceX IPO.
00:07:04
Speaker
Yeah, absolutely. understand that. So and what Shehalin is really set up to do is to invest in companies we believe have the transformative potential for multiple acts of growth so they can become multiples of their current size.
00:07:20
Speaker
And this we see is happening in the private markets. But in one day the time time comes that they will list publicly. And then we will use the public part of the portfolio as a sourcing pot for our new investments in the new generation of private growth companies. And this is something we've been doing from the start. So we've already seen 12 IPOs in the portfolio, three companies were acquired, but we've also been using the emerging secondary market on the private side to trim some positions or liquidate positions that and we were not happy with. So in this way, we have already reinvested close to $400 million dollars back into the portfolio.
00:08:03
Speaker
And now that the fund is fully invested, we'll just be seeing much more of that, right? Because the cash balance is very low. The public proportion sits at around 10%. So we will be seeing, you know, as we're seeing more IPOs and, you know, you named SpaceX, Antropic have been mentioning that they might be heading towards an IPO. I think within the top 10, you know, there's more companies that might be strong IPO candidates in the near future. So we will be seeing much more of this process and we're hugely excited about the pipeline.
00:08:34
Speaker
There's still so many companies we're meeting with very strong business models, good path to profitability, fast growing top lines, great founders. So there's definitely so much to to go for.
00:08:47
Speaker
Thank you so much for the very insightful conversation. And yeah, thank you again for joining me today. Thank you very much.