River and Mercantile Micro Cap to return more cash – The Board of River and Mercantile UK Micro Cap intends to undertake another compulsory redemption of its redeemable ordinary shares. The company has a redemption mechanism in place, which is used periodically to return capital to shareholders, so as to return the company’s net asset value to around GBP100 million. The idea is that, because the fund invests in very small companies, this is the optimal size for the fund. They believe that, at this level of NAV, the company is able to exploit fully the underlying investment opportunity in Micro Cap Companies.
The statement says that: “Following a period of strong performance under the stewardship of the Company’s new lead manager George Ensor, the Company’s NAV has grown to approximately GBP112 million. Accordingly, approximately GBP12 million is to be returned to Shareholders pursuant to the Redemption at a price based on the Company’s NAV per Share as at close of business on 6 July 2018. The Company’s NAV per Share as at 6 July 2018 was GBP2.1660 and, accordingly, after deduction for expenses, the amount to be paid to Shareholders for each redeemed Share is GBP2.1659 (the “Redemption Price”). It is expected that payments of Redemption monies will be effected either through CREST (in the case of Shares held in uncertificated form) or by cheque (in the case of Shares held in certificated form) by 10 August 2018.
The Redemption is being effected pro rata to holdings of Shares on the register at the close of business on 27 July 2018 (the “Redemption Date”) pursuant to a general authorisation to redeem shares held by all Shareholders in accordance with the redemption mechanism in the Company’s articles of incorporation. Approximately 10.6% of Shares in issue will be redeemed and cancelled.”
[QD comment: The fund has had an incredible run since launch, with the NAV more than doubling in just two and a half years. The share price move has been even more dramatic, soaring to an absurd premium early in 2018, only to crash when the previous manager was ousted. The shares fell from 234p to 170p on that news. At the time, the NAV was 191.1p. Today the NAV is 217.3p and, with the shares up 6.6% this morning, the share price is 210p.]
RMMC : River and Mercantile Micro Cap to return more cash