Baillie Gifford managed investment trusts are sharing a multi-billion pound bounty from the record-breaking flotation of Elon Musk’s SpaceX which soared further when its shares began trading on Wall Street.

Eager investors sent the price of the 555.6 million shares from an initial $135 each to $150 soon after the market opened.

They peaked at $176 within the first two hours of trading and closed at $160.95, a 19% premium valuing the company at $2.11trn.

The satellites, rocket launch and artificial intelligence company raised $75 billion in an initial public offering, far surpassing the previous record holder Saudi Aramco’s $29.4bn listing in 2019.

Mr Musk, the 54-year-old founder of SpaceX, has become the world’s first trillionaire. His wealth grew by over $550bn over the past year, equivalent to an average rate of over $1 million per minute, according to Oxfam which is among those questioning the concentration of such wealth in one person.

SpaceX was founded only four years ago and most of its $18.7bn in revenue last year came from its Starlink satellite internet business.

Despite continuing to be loss-making, individual investors submitted more than $100bn in orders, according to Bloomberg. The IPO was said to have been at least four times oversubscribed, leaving many investors without an allocation and forcing them into the secondary market once trading began.

The IPO also attracted huge institutional investor demand. BlackRock reportedly put in an order for at least $5bn worth of shares.

Scottish trusts make an instant killing

Those that had built up large stakes over recent years include Scottish investment trusts: Scottish Mortgage, Edinburgh Worldwide, Baillie Gifford US Growth and the Schiehallion Fund.

SpaceX is the biggest holding for EWIT (c.19% of portfolio) and Scottish Mortgage (c.18%). At last night’s close theose stakes are worth c.$4bn and $3.9bn respectively. It is also the biggest for Baillie Gifford US Growth which has 13.8% of its portfolio tied up in SpaceX worth about $2.9bn.

It is the second-largest holding in Baillie Gifford’s private-equity focused trust Schiehallion which invests in later-stage private businesses. SpaceX accounts for 11.8% of its holding, worth $2.5bn.

Scottish Mortgage, which made a killing in Tesla, first invested in SpaceX in December 2018 and continued directing capital into the business until August 2021. 

The total amount it has invested is £151m with no additional capital deployed in the last five years. Today’s valuation therefore represents a 25 times return. The trust was an early backer of one of Musk’s other companies, the car manufacturer Tesla.

The size of Edinburgh Worldwide’s stake was a key factor in New York hedge fund Saba Capital Management pursuing control of the trust.

SpaceX ranks seventh among America’s largest listed firms when its shares begin trading on the Nasdaq exchange. It is the largest IPO in history – more than three times the size of Alibaba’s 2014 offering. 

Investors grinning like a Cheshire cat

Dan Coatsworth, head of markets at AJ Bell, said: “SpaceX is not only a record breaker in terms of money raised at a stock market debut, but it has also left other big names for dust.

“The 11.1% jump in its opening price to $150 versus the $135 offer level is slightly bigger than Facebook-owner Meta achieved on its stock market debut (+10.7%), although not as good as Rivian (+36.9%), Alibaba (+36.3%) or Visa (+35.2%) when they made their IPO debuts.

“When the starting valuation is already pushing $2 trillion, adding that much value at the click of a finger is impressive.

“The tens of thousands of retail investors who took the risk of buying shares in SpaceX’s IPO offer will be grinning like a Cheshire Cat.

“Someone who bought 20 shares in the IPO offer this week would have invested £2,013. Those shares are now worth £2,236, meaning they’ve already made a £223 paper gain.

“They won’t lock in a profit until the shares are sold, and for more than they paid. In contrast, it would take someone with £2,013 in the bank more than two years to make the same return based on the best-buy cash rate in the market.”

Susannah Streeter, chief investment strategist at Wealth Club, said: “This is a rally being driven as much by hype and scarcity as fundamentals. With just over 4% of the company’s shares made available to public investors, demand far outstripped supply, helping fuel this sizeable first-day pop.

“New investors are not buying today’s business so much as making a bet on tomorrow’s world and how it might evolve… the challenge for SpaceX will be turning those lofty expectations into consistent financial performance, and big questions remain over whether today’s gains can be sustained.”

The listing is likely to encourage a new wave of IPOs with. OpenAI, the maker of ChatGPT, and rival Anthropic, taking steps toward stock market listings that will also exceed $1trn.