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Valuing private companies – our robust approach

September 2022

Key Points

  • Our process is robust and our approach is proactive – we regularly update valuations with the aim of holding our private companies at ‘fair value’
  • From 1 January to 31 May 2022, 169 revaluations have been performed on the private companies held by Baillie Gifford US Growth Investment Trust
  • There are other factors to consider in our valuation approach such as our liquidation preferences – high ranking preference stocks typically offer a higher degree of downside protection

All investment strategies have the potential for profit and loss. The Trust has a significant investment in private companies. The Trust’s risk could be increased as these assets may be more difficult to sell, so changes in their prices may be greater.

We aim to hold our private company investments at ‘fair value’ i.e., the price that would be paid in an open -market transaction. Valuations are adjusted both during regular valuation cycles and on an ad hoc basis in response to ‘trigger events’. Our valuation process ensures that private companies are valued in both a fair and timely manner.

The valuation process is overseen by a valuations committee at Baillie Gifford who take advice from an independent third party (S&P Global). The investment managers feed into the process, but the valuations committee own the process and the investment managers only receive final valuation notifications once they have been applied.

We revalue the private holdings on a three-month rolling cycle, with one-third of the holdings reassessed each month. For investment trusts, the prices are also reviewed twice per year by the respective boards and are subject to the scrutiny of external auditors in the annual audit process.

Beyond the regular cycle, the valuations committee also monitor the portfolio for certain ‘trigger events’. These may include changes in fundamentals; a takeover approach; an intention to carry out an Initial Public Offering (IPO); or changes to the valuation of comparable public companies. Any ad hoc change to the fair valuation of any holding is implemented swiftly and reflected in the next published NAV. There is no delay.

The valuations committee also monitor relevant market indices on a weekly basis and update valuations in a manner consistent with our external valuer’s (S&P) most recent valuation report where appropriate. When market volatility is particularly pronounced the team do these checks daily.

Recent market volatility has meant that recent pricing has moved much more frequently than would have been the case with the quarterly valuations cycle.

Process in action
Baillie Gifford US Growth Investment Trust
Instruments valued 51
Revaluations performed 169
Percentage of portfolio revalued 2+ times 56%
Percentage of portfolio revalued 5+ times 24%
Data reflecting period from 1 January 2022 to 31 May 2022.

Year to date, most revaluations have been decreases. A handful of companies have raised capital at an increased valuation. The average movement in both valuation and share price for those which have decreased in value is shown below.

  Average movement in company valuation Average movement in share price
US Growth* -29.2% -22.0%
*Data reflecting period 1 January 2022 – 31 May 2022 to align with the Trust reporting period end

Share prices have decreased less than headline valuations because Baillie Gifford typically holds preference stock, which provides downside protection. The share price movement reflects a probability weighted average of both the regular valuation, which would be realised in an IPO, and the downside protected valuation, which would be normally be triggered in the event of a corporate sale or liquidation.

Annual Past Performance to 30 June Each Year (Net %)
  2018 2019 2020 2021 2022
Baillie Gifford US Growth Trust 13.2 51.4 66.3 -57.5
Source: Morningstar, share price, total return, sterling. Past performance is not a guide to future returns.

Important information and risk factors           

This communication was produced and approved in August 2022 and has not been updated subsequently. It represents views held at the time of presentation and may not reflect current thinking.

A Key Information Document for the Baillie Gifford US Growth Trust PLC  is available here.

This communication should not be considered as advice or a recommendation to buy, sell or hold a particular investment. This communication contains information on investments which does not constitute independent investment research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions.

The investment trusts managed by Baillie Gifford & Co Limited are listed UK companies and are not authorised or regulated by the Financial Conduct Authority. The value of their shares, and any income from them, can fall as well as rise and investors may not get back the amount invested. 

Further details of the risks associated with investing in the Trust, including a Key Information Document and how charges are applied, can be found in the Trust specific pages at

The specific risks associated with the trust include:

  • The Trust invests in overseas securities. Changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up.
  • The Trust can borrow money to make further investments (sometimes known as “gearing” or “leverage”). The risk is that when this money is repaid by the Trust, the value of the investments may not be enough to cover the borrowing and interest costs, and the Trust will make a loss. If the Trust's investments fall in value, any invested borrowings will increase the amount of this loss.
  • The Trust has significant exposure to private companies. The Trust’s risk could be increased as these assets may be more difficult to buy or sell, so changes in their prices may be greater.
  • Charges are deducted from income. Where income is low, the expenses may be greater than the total income received, and the capital value would be reduced.
  • Investment in smaller companies is generally considered higher risk as changes in their share prices may be greater and the shares may be harder to sell. Smaller companies may do less well in periods of unfavourable economic conditions.
  • The Trust can make use of derivatives. The use of derivatives may impact performance.

All data is source Baillie Gifford & Co unless otherwise stated.

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