Miton UK Microcap Trust plc (LON:MINI) Co-fund manager, Gervais Williams caught up with DirectorsTalk for an exclusive interview to discuss RiverFort Global Opportunities.
DirectorsTalk asked: RiverFort Global Opportunities have built up a healthy cash balance of £2.4 million for future investments, and their shares have been trading at a discount now of over 50% to NAV. So, it looks like a highly attractive entry point, right?
Gervais Williams commented:
“That’s right, their share price did get up to 2p, it’s currently 0.3p, below a penny, that’s how much a lot of these mainstream small caps, microcap stocks have fallen over the last two years, since March 2021.
So, coming back to it, first of all, here we’ve got a company which in valuation terms is now standing at a £3 million market cap. As you say, it’s got £2.4 million of surplus cash which the fund can put to work now and it’s got other investments going forward, and specifically, it’s got quite a lot of opportunity to generate very attractive returns on that. It’s achieved that in the past and that’s why the share price went up to 2p.
The opportunities again for companies to do something which is unusual and not be reliant on global growth, not be reliant on discount rates coming down, but most particularly to get cash in for cash payback like RiverFort, companies which are overlooked, and £3 million market cap companies are more easily overlooked than they are £300 million.
So, the risk-reward ratio, in our view, is particularly attractive at the moment.”
In RiverFort’s unaudited interim results for the six months ended 30 June 2023, announced on 27 September 2023, Philip Haydn-Slater, Non-Executive Chairman, commented:
“Given the difficult market conditions of 2022 continuing into 2023, RGO has continued to accumulate and preserve cash during the period such that at the period end the Company had a cash balance of £2.4 million. This strategy has, however, resulted in a reduction in investment income, although at the same time, the Company has broadly maintained its NAV against this background of difficult markets. In particular, Smarttech247 is progressing well as a listed company which has been reflected in an increase in its share price during the period. However, notwithstanding this and the maintenance of its NAV, disappointingly, the Company’s current shares are trading at a 55% discount to its underlying NAV.
Post period end both in response to attractive investment opportunities and significant demand for the Company’s capital, a number of new investments have been made which, going forward, we believe will generate attractive returns whilst offering downside protection. We believe that this combination continues to be an attractive investment strategy in current markets.”
RiverFort Global Opportunities plc (LON:RGO) is an investment company listed on AIM, part of the LSE, seeking to generate returns for shareholders through capital growth and income by way of dividends. The company invests by providing equity-linked debt funding to public and private small cap growth companies in the technology, natural resources, energy, financial, healthcare, property and specialist industry sectors.
