Miton UK MicroCap (MINI) has issued a statement saying that, following its engagement with shareholders on the future direction of the company – which MINI’s board said it would do given the level of redemption requests received for the 2024 Redemption Point – the board has concluded that it is the best interest of shareholders to wind up the company.

MINI’s board says that, whilst feedback provided to date voiced support for the trust and manager, it was acknowledged that MINI “has been through a challenging period of performance and following this year’s redemption, the company is now at a size which some investors consider to be too small from a liquidity perspective, particularly given the increasing demand from investors for larger listed funds”. The board adds that MINI “continues to trade at a persistent, material discount to its net asset value, with limited options to grow and achieve greater scale”. This has led the board to conclude that it is in the best interests of shareholders to put forward proposals for a voluntary winding up of the company.

A potential rollover option?

The board says that, following this period of engagement, it is conscious both of shareholders’ positive views of the investment manager and of the depressed valuations currently present in UK small and micro-cap companies. As such, it has opened negotiations with Premier Miton about putting forward a scheme of reconstruction under section 110 of the Insolvency Act 1986 and voluntary winding-up of the company through a rollover into one of Premier Miton’s open-ended funds. It adds that, should such a scheme be put forward, it is expected that a cash exit alternative will also be offered. The winding up of the company will be subject to shareholder approval and MINI’s board says that further announcements will be made when appropriate.

[In our view, microcap stocks are unsuitable for open-ended portfolios. The better option would be a merger with River and Mercantile UK Micro Cap. This story reinforces my antipathy towards 100% exit opportunities. The timing of this – ahead of a budget where it was widely and correctly rumoured that there would be changes to capital gains tax, and to inheritance tax on AIM shares – was inevitably going to mean a rush for the exit. Yet again, investors are selling at the bottom.]

MINI : Miton UK MicroCap throws in the towel