Increasingly, the world’s fastest-growing companies are opting to remain private for longer. Why is this? For one, there is far more capital available to private businesses today than there was 30 years ago. Furthermore, the regulatory burden of a public listing makes staying private the path of least resistance for many companies.
In many cases, the most attractive period of a company’s growth occurs before it reaches public markets. Elon Musk’s SpaceX (NASDAQ:SPCX) may have gone public in the biggest initial public offering (IPO) the world has ever seen. Yet for now, most of the innovative firms in the space industry remain privately held.
Put simply, portfolio builders without an interest in private companies are letting many of the globe’s growth star turns pass them by.
As FundCalibre’s Darius McDermott tells Sharesify: ‘When you think of every company on the planet, publicly listed businesses are just the tip of the iceberg. And the current trend suggests that tip is getting smaller, as more and more companies opt to stay private for longer. Investors not accessing private companies could therefore be missing out on a significant amount of opportunity.’
Marieke Christmann at Gresham House Ventures concurs: ‘Some of the most compelling growth businesses of the past decade never made it to the stock market, at least not in the years when most of their value was created.
‘Companies are staying private for longer, driven by the ready availability of private capital and the growing regulatory, reporting and governance burden that come with a public listing. As a result, a greater share of value creation is now happening before a company ever reaches public markets.’
Thankfully, there is a way to gain exposure to baskets of winning private companies at a stroke. And that is through UK investment trusts.
In this article, we explain why investors should consider an allocation to private markets. We also shine the spotlight on five trusts offering exposure to the theme.
Why invest in private companies?
Private equity offers diversification and returns that differ markedly from the public equity markets. And historically, private equity has outperformed public equities over the medium and long term. This has been with a lower level of risk, because private equity returns are typically less volatile than listed equity returns.
Diversification is enabled through the global reach of private equity. The asset class gives investors access to opportunities across regions, industries, and company stages. Through private equity, investors can gain ownership of cutting-edge companies in sectors such as fintech, artificial intelligence and space technology.
One of the major advantages of private equity is the close alignment of interests between investors, managers and other company stakeholders. In a typical PE structure, the fund managers, otherwise known as General Partners or GPs, invest significant personal capital alongside their underlying investors who are known as Limited Partners or LPs. This ensures GPs have ‘skin in the game’. In addition, GPs are usually entitled to ‘carried interest’, a share of profits on disposals, if the investment returns exceeds a certain hurdle.
Caveat emptor
Fundcalibre’s McDermott says it is important to distinguish between the two main types of private equity. ‘Traditional buyout funds acquire mature businesses, often using debt, with the aim of improving them and selling at a profit,’ he explains.
‘After a golden run over the past two decades, these funds are facing headwinds: AI is disrupting many of the software businesses that were a staple of their portfolios, and higher interest rates are creating refinancing pressure across many portfolio companies.’
He continues: ‘Growth equity instead involves taking stakes in fast-growing companies, with the aim of exiting via an IPO or sale. With several high-profile listings in the pipeline, this part of the market is in bull mode, with many trusts in the sector now trading at a premium.’
Ready-made route
Investment trusts offer retail investors a ready-made route to the best pre-IPO opportunities. Demand for private market exposure has grown significantly. But the underlying assets are inherently illiquid, making direct access difficult for most investors.
‘Closed-ended funds solve this,’ says McDermott, ‘as managers can invest without the risk of forced selling, while investors who need liquidity simply sell their shares on the secondary market.’
But there are numerous bear points to consider when it comes to private equity trusts. These include steep ongoing charges which could put some investors off. Furthermore, all 15 trusts in the Association of Investment Companies’ (AIC) Private Equity sector currently languish on discounts to their NAVs.
Selling for a song
Take sector giant 3i Group (LON:III), which is effectively a proxy for Action. The European discount retailer is 3i’s biggest holding. Unfortunately, organic growth has been slowing and this has dragged 3i’s share rating from a premium to a discount.
Other options include FTSE 250-listed NB Private Equity Partners (LON:NBPE), which invests directly into buyout deals alongside leading private equity managers. CT Private Equity (LON:CTPE) adopts a hybrid approach. Around 50% of its investments are made through funds, and the balance are made directly through co-investments. HarbourVest Global Private Equity (LON:HVPE) is one of the sector’s most diversified portfolios. It offers exposure to buyouts, venture investments and real assets including infrastructure.
Investors can also get a taste through the AIC Growth Capital sector, where six trusts offer access to privately-held firms. ‘Our preferred option is Baillie Gifford’s Schiehallion (LON:MNTN),’ enthuses McDermott. ‘It holds some of the largest private companies in the world, including Bending Spoons, ByteDance, Databricks, Revolut, Stripe and Anthropic, and by getting in before a listing, investors can capture far more of the growth.’
McDermott also highlights the attractions of Chrysalis (LON:CHRY), which backs Smart Pension and Starling Bank. He flags Seraphim Space (LON:SSIT) for dedicated exposure to the space sector and points out Molten Ventures (LON:GROW) has a 20% position in Revolut.
Liquid exposure
And don’t forget large, liquid trusts such as Global sector one-stop shop F&C (LON:FCIT). The first-ever investment trust primarily invests in an internationally diversified portfolio of publicly-listed stocks. However, F&C had 11.4% of its assets allocated to private equity as of 30 April 2026.
Another Global sector giant with private company holdings is Scottish Mortgage (LON:SMT). Shareholders recently approved a change to the fund’s investment policy. This tweak provides the managers with limited additional flexibility to invest in private companies when the portfolio is above the 30% limit.
Gresham House Ventures’ Christmann says Venture Capital Trusts (VCTs) offer a well-established route into the private companies opportunity. ‘Beyond direct access to early-stage growth companies, the trust structure brings portfolio diversification and meaningful tax advantages, making it one of the more efficient ways for eligible investors to gain exposure to private markets,’ explains Christmann.
‘Recent changes to VCT investment limits have reinforced this. Higher funding thresholds mean VCTs can back successful businesses through a greater proportion of their growth journey, no longer risking that a company outgrows the structure precisely at the point it begins to scale most rapidly.’
Five ways to play
HarbourVest Global Private Equity (LON:HVPE)
| Share price: £33.85 | Total assets: £3.3bn |
| 10-yr share price total return: 269.4% | Discount to NAV: 23.1% |
Investors seeking an ultra-diversified entrée into the sector should consider HarbourVest Global Private Equity (LON:HVPE), whose shares offer value on a 23.1% discount to NAV. Managed by Richard Hickman, this fund of funds provides access to the growth potential of more than 14,000 private companies. It is also diversified across the main segments of private company investing, giving exposure to a range of risk and return profiles. No single holding exceeds 1.6% of NAV.
HVPE has delivered strong returns over the long-term. And the £3.3 billion fund appears well positioned to benefit from a broad-based recovery in private market exit activity when it comes.
It is also worth noting that the board has announced shareholder-friendly initiatives to help narrow the persistent NAV discount. These include establishing a framework to return circa 5% to 10% of NAV annually as well as the implementation of a continuation vote and a $400 million tender offer.
Patria Private Equity Trust (PPET)
| Share price: 616p | Total assets: £1.5bn |
| 10-yr share price total return: 254.8% | Discount to NAV: 29.1% |
A wide 29.1% NAV discount on Patria Private Equity Trust (LON:PPET) presents a compelling point of entry into one of the AIC Private Equity sector’s best five-year share price total return performers. Managed by Alan Gauld, Patria Private Equity partners with a small group of top-tier European GPs, many of which are sector experts.
The trust’s sweet spot lies in the European mid-market, defined as companies with enterprise values (EVs) between €100 million and €1 billion at entry. Mid-market businesses are attractive because they tend to be growing and profitable niche market leaders, but also boast strong expansion opportunities.
Sharesify is a fan of this trust, which gives investors underlying exposure to hundreds of private companies diversified by country, sector and maturity. The portfolio is skewed towards non-discretionary sectors with lower cyclicality. These include IT companies such as Visma, a mission-critical business software provider to small and medium enterprises. Like 3i, Patria Private Equity provides exposure to Action. Other underlying holdings are Namsa, a contract research organisation for preclinical and clinical device companies, and German wound care specialist Wundex.
Patria Private Equity continues to execute NAV-accretive share buybacks. It is also an AIC ‘Next Generation Dividend Hero’, having increased the dividend for 11 years in a row.
Scottish Mortgage Investment Trust (LON:SMT)
| Share price: £14.50 | Total assets: £17.6bn |
| 10-yr share price total return: 485% | Discount to NAV: 1.45% |
Baillie Gifford’s flagship trust Scottish Mortgage (LON:SMT) aims to identify, own and support the world’s most exceptional growth companies. With roughly £18 billion in total assets, the trust has a reputation for identifying transformational businesses and holding them through multiple chapters of growth. Importantly, it has also developed significant exposure to private companies, allowing shareholders to participate in value creation that would otherwise be inaccessible to most retail investors.
Lead manager Tom Slater believes the trust is positioned around long-duration winners in AI, automation, cloud computing and digital infrastructure. Scottish Mortgage had long been a backer of SpaceX before its IPO. Today, its portfolio of private holdings includes AI company Anthropic, the Claude creator that has registered to list in the US. Other private holdings with potential IPO appeal include Stripe, Databricks and ByteDance.
‘For those seeking exposure to the next generation of global growth companies,’ says McDermott, ‘a trusted investment trust with a proven track record may offer a more attractive route than joining the queue for the latest IPO. In that regard, Scottish Mortgage remains one of the most interesting vehicles available to long-term investors today.’
Seraphim Space Investment Trust (LON:SSIT)
| Share price: 204p | Total assets: £663.8m |
| 3-yr share price total return: 470.3% | Premium to NAV: 14.9% |
Adventurous investors who can stomach the 14.9% premium to NAV could choose Seraphim Space (LON:SSIT). Managed by Mark Boggett, James Bruegger and Rob Desborough, this trust backs private SpaceTech companies with the potential to dominate globally. Boggett and Bruegger believe the SpaceTech market is at a critical inflection point and that space is becoming an integral part of the AI revolution.
About to enter the FTSE 250, Seraphim recently raked in £137 million via a C share offer to fund fresh investments. And the shares were also boosted after largest holding ICEYE quadrupled its valuation to over €10 billion in its latest financing round. The Finnish satellite constellation operator spoke for 47.1% of Seraphim’s NAV as at 31 March 2026.
Bruegger said the ICEYE financing round demonstrates Seraphim’s ‘ability to provide access to category-leading SpaceTech companies at the forefront of some of the most important technological and geopolitical trends shaping the global economy’.
ICEYE’s stunning valuation uplift demonstrates Seraphim’s NAV is probably understated. Contract wins and new funding rounds are driving the valuations of its portfolio companies higher. Besides ICEYE, the fund’s exciting holdings include the likes of D-Orbit, ALL.SPACE and Xona Space Systems.
Literacy Capital (LON:BOOK)
| Share price: 305p | Total assets: £298.3m |
| 3-yr share price total return: -37.3% | Discount to NAV: 36.3% |
One lately-unloved private equity trust using its returns to invest in a good cause is Literacy Capital (LON:BOOK). Managed by Paul Pindar, the former CEO of Capita (LON:CPI), and his son Richard, Literacy Capital listed in 2021.
The trust has a charitable mission helping disadvantaged children in the UK learn to read. Each year, the company makes donations equivalent to 0.5% of its net assets to literacy and education charities. A cavernous 36.3% NAV discount leaves scope for a significant re-rating if performance improves and the pace of realisations accelerates.
Literacy Capital invests solely in smaller UK companies. It helps their management teams to achieve long-term success. However, 2025 was a disappointing year for the fund. Economic uncertainty and a write-down of its holdings in healthcare provider RCI and graduate recruitment company Grayce rocked investor confidence.
But the trust offers investors exposure to an array of holdings with good growth potential. These include electronics manufacturer TechPoint and school travel operator Bright Ventures. Other investments include premium meat products maker Red Sky, housebuilder Antler and test automation software provider Trinitatum.
Literacy Capital’s net cash balance sheet gives the fund financial flexibility. And we like the fact that the portfolio appears prudently valued. Since the start of FY26, more than £36 million of cash has been received by the fund. And all disposals in Literacy Capital’s history, including those completed in 2026-to-date, have valued the assets in line with or at a premium to prior carrying values.
