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Seraphim Space Investment Trust
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== Premium/discount reflects scarcity, valuation policy, illiquidity and market volatility == Since launch, SSIT’s share price has traded largely at a premium to its cum-income NAV, despite the high level of undrawn cash within the fund. More recently the share price sold off in sympathy with the general tech correction seen in the wider market, although, with some recovery, it now trades at around NAV. '''Exhibit 7: Volatile premium/discount range since launch'''<ref name=":0" /> [[File:Volatile premium range since launch.png|600px]] In general terms, Edison Investment Research believes that SSIT’s valuation (Exhibit 7) reflects the underlying illiquidity of its investments, leading to an inherent lag in the reported quarterly NAV. This is countered by the degree of investor interest in space and high (potential) growth technology and scarcity value, as the sole global listed investment vehicle focused on this industry. This can mean that while scarcity (of this type of pure space technology fund) points to an inherent premium, the valuation obscurity and, as Edison Investment Research sees currently, a significant technology stock sell-off can lead to episodes of high volatility, translating into periods of high premium and discount. In 2022 to date the share price has seen significant volatility trading from 125.4p on 31 December 2021 to a trough of 91p on 25 January before recovering to 112p recently. High-growth, long-duration assets saw a significant correction as the market rotated away from growth to value primarily due to inflation and interest rate expectations. The majority of the portfolio is unquoted, but it is worth referencing the share price movements of the three quoted holdings Arqit Quantum, Spire Global and AST Space Mobile, which at December 2021 accounted for around 23.7% of NAV. While Arqit’s value increased from £36.1m to £47.9m, SSIT’s holdings in Spire Global and AST fell in value over the quarter from £11.9m to £5.5m. '''Exhibit 8: Quoted portfolio performance since July 2021'''<ref name=":1" /> [[File:Quoted portfolio performance since July 2021.png|600px]] Although SSIT is not yet fully invested, Seraphim Space has an identified near-term c £88m pipeline of investments. In the future, SSIT will likely conduct further rounds of equity issuance to meet its funding requirements as it strives to maintain its equity share in its portfolio holdings as they grow, although they may end up being diluted. While any additional equity issuance should limit upward pressure on SSIT’s premium, as will future NAV uplifts, the company’s uniqueness within the UK listed sphere, combined with its ‘backward-looking’ NAV, may mean that there will be potential volatility in the share price.
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