Miton UK MicroCap (MINI) proposes a voluntary wind-up with a potential rollover into a Premier Miton open-ended fund, offering shareholders a choice between continued micro-cap exposure or a cash exit. Meanwhile, Edinburgh Worldwide (EWI) unveils plans for a £130m capital return and strategic changes to boost performance, amid speculation over SpaceX’s impact on its discount.

Miton UK MicroCap proposes rollover

Miton UK MicroCap (MINI) announced that the Board thinks “it is in the best interests of shareholders to put forward proposals for a voluntary winding up of the Company.” This follows a high level of redemption requests received for the 2024 Redemption Point after which the Board promised it would discuss the fund’s future with shareholders.

The Board has started discussions 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. Should the Scheme be put forward, it is expected that a cash exit alternative will also be offered.

Numis: “A rollover may be attractive for people who wish to maintain exposure to the asset class, given the micro-cap portfolio may take some time to sell assets, with price risk.”

Winterflood: “In our view, giving shareholders the option of a cash exit and close to NAV or a rollover into a more liquid vehicle with a similar strategy represents best practice. Nevertheless, we would highlight that the micro-cap strategy was ideally suited to the closed-ended fund structure and would therefore expect an equivalent open-ended fund to invest further up the market cap spectrum in order to manage the associated liquidity issues.”

Edinburgh Worldwide proposes £130m capital return

Edinburgh Worldwide (EWI) became the latest Baillie Gifford-run fund to announce plans to return capital to shareholders. Hot on the heels of last week’s announcement from Baillie Gifford China Growth (BGCG) detailing a conditional tender offer for up to 100% of the issued share capital of the company, EWI provided a company update setting out a number of steps designed to turnaround the fund’s performance. As well as changes to team composition and structure “to increase challenge and enhance performance” and changes to process and approach “to improve decision-making and portfolio discipline”, there’s a commitment to return up to £130m to shareholders in 2025.

The changes are subject to shareholder approval. One notable shareholder, Saba Capital. The US activist investor last disclosed it had a c.18% stake in the fund. Presumably, Saba will be voting for the plans.

Winterflood: “EWI’s discount has tightened considerably in recent months and weeks, and now stands at c.4%, significantly tighter than its Global Smaller Companies peers and Baillie Gifford global stablemates. We attribute this to the buying activity of activist US hedge fund Saba Capital, which now has an 18.1% stake. We suspect the presence of this investor on the share register was a key driver of the Board’s decision to introduce the commitment to return up to £130m of capital to shareholders next year”

Numis has another theory for the sharp discount narrowing: “This may reflect enthusiasm around SpaceX, which press reports have indicated may be undertaking a tender offer to allow existing shareholders to sell at a valuation rumoured to be above the previous valuation in mid-2024. SpaceX was 12.4% of Edinburgh Worldwide’s total assets at 31 October.” SpaceX to the rescue?

Dividend Watch

Shires Income (SHRS) shares were offering an eye-catching yield of 5.9% as at the end of the latest half-year period. That’s based on the 14.4p current annual dividend rate and the share price as at half-year end. What’s more, that’s after the share price total return for the six-months to end of September came in at a benchmark-beating +14.5%.