Shareholder opposition sparks Rights & Issues to suspend buybacks

A significant shareholder in Rights & Issues has forced the suspension of the UK smaller companies trust's buyback programme – a move the board is hoping to reverse, given the trust's widening 20% plus discount.

The board of Rights & Issues (RIII ) investment trust has suspended its buyback programme after facing opposition from a ‘single material shareholder’.

The UK smaller companies trust withdrew the resolution giving it the authority to buy back shares from the business of its annual general meeting, held on 24 March. This means the share buyback programme, which had been announced in July 2024, has been suspended.

That comes despite the trust falling to trade at a more than 21% discount to the value of its small-caps portfolio. That is the widest level seen since 2016, according to Morningstar.

According to Refinitiv data, Simon Knott, the former manager of the £88m trust, is the largest shareholder with 16% of the share capital. Dartmoor Investment Trust, managed by Nicholas Lewis and his family, is second with a 13% stake, while Josephine Knott (understood to be the mother of Simon) holds a stake that is a little under 10%.

In spite of the suspension of the buyback programme, the board said the ability of the trust to repurchase its own shares is ‘fundamental’ to the trust’s discount management policy.

‘The board therefore proposes to consult with shareholders to address any concerns that have influenced their voting. Following these consultations, a general meeting will be convened to seek shareholder approval of a new share buyback authority,’ they explained.

So far in 2025, the board had repurchased £1.1m worth of shares, equating to 1.1% of the share capital, according to Deutsche Numis. This followed £17.7m worth of shares that were bought back in 2024, accounting for 13.8% of the share capital.

Rights & Issues is now managed by Jupiter’s Matt Cable. Over the past three years, the trust’s shares are down 20.8%, on a total return basis, which compares to a 7.3% share price fall by the average trust in the AIC’s UK Smaller Companies sector.

The trust currently closed yesterday on a 21.1% discount to net asset value (NAV), versus an 11.8% average over the past year.