Seraphim Space Trust Struggles to Gain Investor Interest Despite Defence Spending Boom

Seraphim Space Investment Trust, a London-listed company specialising in military applications in space, has faced a perplexing lack of interest from investors despite the announcement of significant increases in global defence spending. According to its manager, Mark Boggett, the trust’s share price has barely moved, even as other defence-related stocks have enjoyed substantial gains.

The company invests heavily in advanced space technologies with a particular focus on defence. Around 78 per cent of its net asset value is tied to companies that are either fully or partially involved in military-related activities. Iceye, its largest investment, operates radar satellites capable of producing high-resolution images under any weather conditions. These satellites are currently being utilised by the Ukrainian military during the ongoing conflict in Eastern Europe.

Additional holdings include Allspace, a company that manufactures antennae capable of receiving signals from multiple satellites simultaneously, which could play a crucial role in navigation when GPS systems are unavailable. Seraphim has also backed D-Orbit, which has developed innovative technology to deploy military and commercial satellites via a “rocket-within-a-rocket” system.

While reporting a 6.8 per cent increase in net asset value per share to 101.04p for the year ending December, the trust is still trading at a significant discount to its assets. This discount, measured at 46.2 per cent at the year-end, reflects broader challenges within the UK investment trust sector, where thin liquidity and risk aversion remain prevalent themes. The current discount, however, is an improvement from the 63.3 per cent figure reported a year earlier.

Cash reserves at Seraphim currently stand at £23.5 million, with an additional £14 million held in liquid listed stocks. Investors such as Sir Richard Branson and the UK government, through the British Business Bank, remain key stakeholders. Boggett remains optimistic about the trust’s future, citing the potential for mergers and acquisitions activity ahead, which could generate additional capital to reinvest into high-performing portfolio companies.

Amid escalating European defence budgets following geopolitical tensions, defence firms have seen their valuations soar. For example, BAE Systems shares have risen by 27 per cent in the past month alone. However, Seraphim’s inability to capitalise on this momentum highlights the persistent challenges facing UK-listed investment trusts despite robust underlying assets.