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Seraphim Space Investment Trust
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== Current portfolio positioning == SSIT currently has 23 companies in its portfolio, with 68% of the company’s investments in the top 10 holdings. The manager considers there is considerable future growth in the 4.6% that represents the rest of the portfolio, particularly in companies like Spire, AST and Xona. By stage, there is just 2% of the portfolio in seed investments, 7% in series A, with the rest invested in +B series growth companies. Edison Investment Research notes that the three listed companies account for around 21% by value and only 14% by volume. Seraphim Space uses its information advantage gained via its network and in depth understanding of the sector to identify and invest in businesses that are emerging category leaders, with high growth potential and to avoid what it would regard as the more commoditised areas of the market, such as rocket launchers. Seraphim’s focus is around satellites and associated technology, such as connectivity, security and data – where digital platforms can be created in space to address the most crucial problems on the earth. '''Exhibit 2: SSIT portfolio at December 2021'''<ref>Source: Seraphim Space Investment Trust.</ref> [[File:SSIT portfolio at December 2021.png|600px]] Subsequent to the last NAV reported for end December 2021, there have been four investments in SSIT accounting for £6.5m, including a new investment of £0.2m into a US space situational awareness company (not as yet disclosed) and two follow-on investments. In March, SSIT completed a new £2.6m investment in Pixxel, which is an Indian-based developer of miniaturised hyperspectral satellite constellations and analytical tools capable of imaging the earth in optical bands invisible to the human eye. Its technology has applications in agricultural efficiency, environmental surveillance and pinpointing the location of natural resources. Meanwhile, some of the listed holdings have seen some quite significant declines in share price, reflecting the market direction as long duration growth assets have sold off. SSIT made additional investment into Spire Global, doubling down on its stake. More positively the company’s holding in D-Orbit is slated for listing, subject to a number of outstanding conditions via a special purpose acquisition company (SPAC; Breeze) in Q322 on Nasdaq with an implied enterprise value of c $1.28bn. D-Orbit shareholders will account for 84% of Breeze; SSIT currently owns 9.3% (fully diluted) of D-Orbit. A successful listing of this SPAC could be materially accretive to SSIT’s future NAV. === Top five holdings at December 2021 === '''Arqit (UK): Distribute unhackable encryption keys within the cloud''' Arqit (ARQQ) listed on Nasdaq in September 2021, although Seraphim first invested in March 2018. It develops encryption for the cloud era, using a constellation of satellites equipped with laser communication terminals that use quantum technology to distribute un-hackable encryption to any end device. The advent of quantum computers could render traditional encryption technologies and infrastructure redundant. Arqit is addressing this issue through laser transmission of data that is secure and immune from quantum powered decryption. Arqit’s founder had previously founded and successfully listed Avanti Communications and has a team of high-quality satellite and cybersecurity industry veterans supported by world-class consortium partners and significant non-dilutive funding from the European Space Agency. In its first set of results post listing for the financial year ending September 2021, despite posting losses, it had end-September cash and deposits of $87m and secured contracts valued at $130m. In February 2022, Arqit announced that it had signed a research and development agreement with the US Air Force to demonstrate the effectiveness of the technology. '''ICEYE (Finland): Global change detection constellation''' ICEYE operates the world’s first and largest constellation of miniaturised satellites that use radar to image the Earth both during the day and night, even through cloud. ICEYE’s radar technology has the ability to monitor change in near real-time with unrivalled sensitivity and at a global scale. Ultimately the aim is to monitor any square metre of earth every hour and provide change detection on areas of interest. It will then be able to provide change detection on how that point on earth changed in the last day, week, month or year. SSIT believes this dataset is hugely valuable; it is applicable to many industrial verticals. Seraphim first invested in 2017 before ICEYE launched its first satellite. SSIT announced in December 2021 that it had completed the purchase of the LP Fund’s holding in ICEYE for £20.8m. Also during December SSIT invested a further $25m (£18.7m) leading the company’s $136m D series funding. '''Isotropic Systems (UK): Meshed satellite connectivity''' Isotropic aims to create a network of ground-based antennas capable of connecting to any satellite in any orbit. The company is developing technology that can ‘mesh’ satellites together, linking to multiple satellite services for uninterrupted connectivity. This is especially relevant in mobility, allowing cars, trains, boats and planes to connect to the internet in all circumstances. The transportable design of the technology enables its use in portable consumer applications as well as maritime and defence and the company has recently conducted successful trials with the US military. In September 2021, SSIT invested $25.0m (£18.0m) in Isotropic’s $37m Series B funding round. SSIT was the lead investor in this round. '''HawkEye 360 (US): Mapping hidden activities''' HawkEye 360 is the world’s leading commercial provider of space-based radio frequency (RF) data and analytics. It operates its own constellation of satellites to collect, identify, process and geolocate a broad set of RF signals generated on Earth from very high frequency (VHF) radios, radars, cell towers, satellite phones, emergency beacons and more. HawkEye 360’s analytics help first responders save lives, law enforcement halt hidden illegal activities and telecoms operators utilise spectrum. Its capabilities include mapping signals of interest, creating surveys of global spectrum usage and providing deeper visibility of maritime activities. It can help government agencies and corporations scrutinise borders, and counter illegal fishing, drug running, people trafficking and poaching, and assist where natural disasters limit the scope for conventional forms of surveillance. Seraphim co-led the $145m Series D funding round with a $25m (£18.6m) investment in November 2021. '''LeoLabs (US): Space debris mapping''' Space debris represents a systemic risk to the modern world. A collision between one satellite and another, or with a piece of ‘space junk’, could have potentially catastrophic consequences. LeoLabs uses a network of proprietary ground-based radars to track every piece of space debris down to 2cm in size as far as 1,000km up in orbit. By mapping the skies in real-time and monitoring 10x more objects than existing government-operated systems, LeoLabs is aiming for its cloud-based data platform to become the ‘air traffic control’ system for space that rocket launchers, satellite operators, regulators and insurers will rely upon. In July 2021, SSIT invested $3.1m (£2.1m) in LeoLabs through a combination of primary and secondary share subscriptions. This investment formed part of LeoLab’s $65m Series B funding round, which was led by Insight Partners – a large US growth investor.
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