REG - River UK Micro Cap - Launch of Buyback Programme

River UK Micro CapAnnouncement

Mon 07:00

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RNS Number : 7064T  River UK Micro Cap Ltd  04 August 2025

 
 

 

River UK Micro Cap Limited

Intention with regard to Redemption Mechanism

Launch of Buyback Programme

The Board of River UK Micro Cap Limited (the "Company") announces an evolution
in the Company's commitment to returning capital to shareholders, alongside
the launch of a share buyback programme, both of which are aimed at addressing
the prevailing discount to NAV.

Intention with regards to the redemption mechanism

Since its launch in 2014, the Company has returned more capital to
shareholders (c.£77 million) than it has cumulatively raised (c.£70
million), delivering a c.12.8% IRR to 31st July 2025.

Despite a strong recovery in NAV performance over the last two years, and
consistently top decile performance in the IA UK Smaller Companies sector over
12 months to end June 2025, the Board of the Company is reinforcing its
commitment to shareholders, in light of the persistent discount

To reaffirm its long term confidence in the sector and the Portfolio Manager,
should no capital be returned to shareholders by way of a compulsory partial
capital redemption under the existing redemption mechanism ("Redemption
Mechanism") before 30(th) June 2028, the Board will put forward proposals to
provide a full cash exit for shareholders by way of voluntary winding up of
the Company or other corporate action. In order to achieve this capital
redemption, the Company must deliver a net asset value ("NAV") performance of
c.11.1% compounding per annum.

Prior to making this statement of intention, the Board have taken into account
the views expressed by 42.4% of shareholders who are supportive of the changes
the Board are announcing today.

The Redemption Mechanism periodically returns capital to shareholders, aiming
to maintain the Company's NAV at approximately £100 million, in accordance
with the Company's stated policy in the original prospectus. The Board
considers this level of NAV optimal to fully capitalise on the underlying
investment opportunity available in UK micro cap companies. All redemptions
will normally be subject to a de minimis value to be returned of approximately
£10 million (before costs).

The wider environment has presented challenges for UK micro cap companies,
reflected in the absence of compulsory redemptions since 2021 and the
persistent discount at which the Company's shares trade relative to its NAV.
Despite these headwinds, the Board maintains strong conviction in the
Company's investment strategy and believes that, amid signs of recovery in the
UK micro cap sector, the Company is well-positioned to deliver

 

strong shareholder returns. This confidence was reinforced in 2024, when the
Company outperformed its benchmark, returning 19.9% vs 5.0% (Numis Smaller
Companies + AIM (ex ICs).

The Board believes that a 3-year timeframe is appropriate for the Company to
demonstrate the efficacy of its investment strategy and the Company's capacity
to generate sustained capital growth for shareholders.

"We can already see strong signals that micro caps are beginning to power up
and we feel the Company is really well positioned to grow rapidly on two
fronts: as UK companies positively re-rate after a period of low valuations
and more certainty in the economy boosts small company growth prospects.
Should theses persistent discounts and muted performance be structural -
rather than cyclical - then we have implemented a safety net for investors to
get out at close to net asset value. However, the Board believes strongly that
the long-term future success of the Company will be cemented by delivering
attractive growth and more redemptions to shareholders over the next three
years," commented Board Chair, John Blowers.

In the event that the Company has not returned a minimum of £10m of capital
via its Redemption Mechanism prior to 30th June 2028, the Board will present
proposals to enable a full cash exit for all shareholders.

Proposals to provide a full cash exit for shareholders by way of voluntary
winding up of the Company or other corporate action would require the approval
by shareholders of relevant resolutions put forward at a General Meeting of
the Company.

The Board will take account of any shares bought back when determining the
size of the Company in respect of the Redemption Mechanism, to avoid creating
a misalignment with the use of buybacks to optimise returns per share.

Share Buybacks

The Company is pleased to announce that it has appointed Singer Capital
Markets Securities Limited to manage a programme (the "Share Buyback
Programme") to buy back ordinary shares of no par value ("Ordinary Shares")
for up to a maximum aggregate consideration of £2.0 million and subject to
Ordinary Shares being available to purchase at up to a price representing a
discount of 10.0 per cent. to the most recently announced NAV per share
prevailing at the time of repurchase, alongside other certain pre-set
parameters.

The Share Buyback Programme will commence today and any shares repurchased
pursuant to the Share Buyback Programme will count towards the Company's
general buy back authority of 14.99 per cent. of the Company's issued share
capital, as approved at the Company's last annual general meeting on 12 March
2025.

Under the Buyback Programme, the repurchased shares will be held in treasury
at the Company's discretion for later cancellation. Shares held in treasury
are not entitled to dividends and have no voting rights at the Company's
general meetings.

The Company confirms that it currently has no inside information.

Further Information

John Blowers, Chairman and George Ensor, Portfolio Manager will lead a
presentation and discussion on today's announcement at the Reaffirming
Shareholder Value webinar, hosted by Investor Meet Company on 06 August
2025 at 3pm. Investors can sign up to Investor Meet Company for free and add
to meet RIVER UK MICRO CAP
LIMITED via: https://www.investormeetcompany.com/river-uk-micro-cap-limited/register-investor
(https://www.investormeetcompany.com/river-uk-micro-cap-limited/register-investor)

- ENDS -

For further information please contact:

Lucy Draper Lucy.Draper@river.global Tel: +44 7702 799 117

 

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