Miton UK MicroCap Trust PLC on Friday said the UK budget was the ‘final nail in the coffin’ as it revealed it was proposing a voluntary wind-up of the vehicle to investors.

Miton UK MicroCap is a UK-based investment trust that invests primarily in the smallest companies by market capitalisation in the UK.

NAV per share including fair value of warrants declined 8.0% to 51.79 pence from 56.29p in the six months to October 31, with its share price down by 12% to 44.4p from 50.5p over the same period. It’s discount to NAV widened to 14% from 10%.

The trust tied its decline in NAV over the period to the fall in AIM-listed microcap shares as investors expressed concerned over the implications of inheritance tax levies on holdings in the lead up to the budget in October.

As a consequence of its persistent discount to NAV and with ‘limited options to grow and achieve greater scale’, Chair Ashe Windham said proposals have been put forward to shareholders with regard to the voluntary wind-up of the company.

This follows a large proportion of redemptions, 40.4%, which Windham noted were ‘fuelled by arbitrageurs’ and significantly reduced liquidity.

Windham continued: ‘The UK microcap universe has been an extremely demanding area to invest in over the past three years with multiple headwinds, the UK budget being the final nail in the coffin’.

The trust noted that the ‘UK stock market itself has already started keeping pace with the mainstream US indices, despite its lack of a megacap technology stock tailwind’, and with a potential for a trend of UK stock market outperformance, it is exploring a way to allow investors to roll-over their holdings into one of Premier Miton Group PLC’s open-ended funds or to receive cash on a winding up.

The winding up is subject to shareholder approval, with the trust expecting to make relevant announcements in the coming weeks.

Its shares fell 3.2% to 44.14p on Friday afternoon in London.

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