Update: Chelverton fund managers are not dismayed at having just £6.3m to manage in the rump of the Investment Company (INV ) after its investors tendered 83.4% of the shares.

The tiny self-managed closed-end fund announced in March that rather than wind down after 155 years, it would appoint the managers of the top-performing MI Chelverton UK Equity Growth fund to run the portfolio.

However, the opportunity to exit the £16m minnow at close to net asset value rather than a 6% discount proved more attractive to most shareholders, with a mere £2.7m estimated by analysts to have opted to remain managed by Chelverton’s small-cap stock pickers James Baker, Edward Booth and Henry Botting.

Chelverton staff and other investors have subscribed for £3.6m new shares, meaning the managers now have £6.3m, according to Numis analyst Priyesh Parmar. That makes it one of the smallest funds listed on the London Stock Exchange, with a mountain to climb to become viable.

‘We’re delighted with those shareholders who have decided to stay with The Investment Company, despite the change in strategy and the opportunity to exit near NAV. The placing itself was not widely marketed, so we’re not surprised by the level of new investors,’ Baker (below) said in a statement to Citywire.

Parmar was unconvinced. ‘Even with a new manager in Chelverton, we expect the ongoing strategy will struggle to attract demand. Chelverton already manages a £38m listed fund, Chelverton UK Dividend (SDV ), which seeks to deliver a high income from a portfolio of small and mid-caps, run by David Horner and Oliver Knott, while the proposed approach for Investment Company is capital-growth focused,’ the analyst said in a note to investors.

But Baker is confident Chelverton can repeat its success with the open-ended Chelverton UK Equity Growth fund which launched with just £2.2m in October 2014 before growing to over £800m today.

‘If the investment trust can match the UK Equity Growth Fund’s early performance, then we would hope to raise considerably more money, once market conditions are more favourable,’ he said.

In common with other UK stock pickers operating below the FTSE 100, Baker was excited at the timing of the relaunch.

‘At Chelverton we think this is a great time to be assembling a portfolio of UK small and mid-cap growth stocks, while they are so out of favour, and in the manager’s view offering excellent value.

‘The important thing from Chelverton’s perspective is to have found a suitable investment trust vehicle where we can put our UK Growth strategy to work, and then look to grow it on the back of a tangible track record.’

As part of the appointment, Horner, a founder of Bath-based Chelverton, will become a non-executive director on the trust’s board.