A public-market lens on private growth
Peter Singlehurst, partner at Baillie Gifford and co-manager of the Schiehallion Fund, outlines how public market expertise shapes the firm’s approach to later-stage private investing.
INTERVIEW
Peter Singlehurst
Private companies are now scaling further and creating more value before they ever reach the public markets. For investors, understanding how that shift reshapes opportunity is critical.
In our video interview, Peter Singlehurst, partner at Baillie Gifford and co-manager of the Schiehallion Fund, explains why later-stage private growth has become such an important part of the corporate lifecycle – and how Schiehallion seeks to capture that compounding potential with public-market discipline.
Below, we expand on the themes discussed, exploring how the team sources opportunities, manages risk and identifies the signals that could define the next generation of public-market leaders.
When you look back at your most successful investments, what signals mattered most at the point you invested?
Most of the companies Schiehallion backs are founder-led, which often matters for culture, speed of decision-making and long-term ambition. The common thread is not a particular sector or theme, but the presence of a distinct business model advantage that allows growth to be sustained over time. The strongest investments tend to have clear structural strengths – whether through cost leadership, platform effects or exceptional talent density – that make it difficult for competitors to catch up as the business scales.
Every investment is underwritten with the belief that it can deliver an exceptional outcome. That doesn’t mean all investments work out. Execution risk remains real, and not every company delivers on its potential. But experience shows that private growth investing is defined by asymmetry: a small number of exceptional outcomes drive the majority of long-term returns. We tend to regret passing on investing in companies that ended up being very successful more than investments that failed, as these have a much more detrimental, if less visible impact on performance.
With the fund now fully invested, how do you think about valuation discipline, risk control and recycling capital over time?
Valuation discipline sits at the heart of how Schiehallion manages private market risk. Although prices are not set daily, valuations are not treated as static or subjective. Each holding is valued independently in line with industry standards, with external input and reviewed at least quarterly – though in practice many are assessed five or more times a year.
Adjustments are driven by fundamentals rather than sentiment. Financial performance that deviates materially from a company’s business plan, evidence from arm’s-length transactions, or significant moves in relevant public market comparators, can all trigger reassessments outside the regular cycle. The emphasis is on ensuring valuations reflect operating reality as closely as possible, even in the absence of continuous market pricing.
The most likely exit route for investments is into the public markets. Since inception in 2019, the portfolio has seen 11 IPOs, providing liquidity that can be redeployed into new opportunities. With private market valuations still fair and several large listings expected, that recycling mechanism remains an important part of the strategy. The team maintains an active pipeline, allowing proceeds from IPOs to be reinvested into the next generation of exceptional private growth companies.
In parallel, the secondary market has matured significantly. SpaceX, for example, runs a biannual tender process, which Schiehallion has used to manage position sizing, realise returns and recycle capital into new investments.
‘Unlike many private investors, our team underwrites every investment with a clear view of how it would ultimately be judged by public market investors’
Baillie Gifford is best known for public market investing. What is the rationale for having a private investment team within a public equity house?
Baillie Gifford are known as public growth investors. In the early 2010s, we started observing that many companies that would make a great investment were staying on the other side of the IPO divide. We made our first investment in 2012 – in Alibaba. At the start, Baillie Gifford began investing privately within existing trusts and mandates, partly to test whether companies staying private for longer were simply a by-product of the zero-interest-rate era. Over time, it became clear this was a structural shift rather than a temporary one, which led to the creation of a dedicated private companies team, alongside the legal and operational infrastructure needed to support it.
Baillie Gifford’s core skillset – identifying transformational growth companies and backing them for long periods – translates naturally across public and private markets. By housing private investing within a public equity firm, we can apply decades of knowledge and pattern recognition of transformational growth, together with a public market perspective on business quality, governance and the path to profitability. Unlike many private investors, our team underwrites every investment with a clear view of how it would ultimately be judged by public market investors.
That combination also makes the firm attractive to companies looking for shareholders who understand the journey to IPO. Founders often value investors who can be supportive in the private phase, help them prepare for life as a listed company and potentially stay with them after listing – either through Schiehallion, where we see at least five-times upside, or through Baillie Gifford’s public market strategies. That continuity is not theoretical. Baillie Gifford backed Spotify early when it was still private and remains one of the company’s largest shareholders through public-market mandates. In practice, this combination of expertise and continuity puts us in a strong position to access some of the world’s most valuable private growth companies.
How do you source private opportunities, and why does access matter so much at this stage of growth?
Access is critical in later-stage private investing because many of the highest-quality companies are not being broadly marketed. More than 80% of Schiehallion’s investments are sourced off-market, either through direct engagement with companies or through reverse enquiries, where founders approach us about investing.
That reflects both long-standing relationships and Baillie Gifford’s reputation as a supportive, long-term shareholder. Many companies are selective about who they bring onto the register as they scale towards public markets, and they are often looking for investors who understand that transition, rather than simply providing financial capital. At this stage of growth, shareholder alignment matters. Because so much of the activity happens away from auction-driven processes, access is less about speed and more about trust. That allows Schiehallion to be selective, invest with conviction and avoid the valuation pressure that often accompanies heavily intermediated deals.
‘Taking a company public is typically a once-in-a-career event, and access to peers who have navigated that process can be invaluable’
How do you support companies as they transition from private growth businesses to public-market-ready organisations?
The transition to a public company entails building the organisational and governance structures that public market investors expect. In practice, that means helping management teams evolve from founder-centric boards to more professionalised structures, and supporting the development of finance and investor relations functions that can sustain life as a listed company.
A key part of that support comes through convening. Baillie Gifford runs targeted events and forums, often bringing together executives from private companies alongside leaders from public companies who have already been through the journey. CFO-focused programmes are a good example. Taking a company public is typically a once-in-a-career event, and access to peers who have navigated that process can be invaluable in helping management teams anticipate what lies ahead.
As experienced public market investors with a broad network, we can help facilitate those conversations at the point where they are most useful and help companies build the scaffolding that public market investors often take for granted.
