The lure of £125m cash for his gated fund has prompted Neil Woodford to pull the rug out from a private equity fund currently trying to rally support for a BCA Marketplace takeover.
TDR Capital filed a regulatory notice on Wednesday afternoon stating that a letter of support from Woodford Investment Management was among 43.27% worth of shareholder support in favour of a takeover of the FTSE 250 car auction firm.
However, unbeknown to TDR the very same day Woodford was selling 6.58% of his shares for approximately £125m forcing the private equity firm to file a follow-up RNS less than 24 hours later, notifying the market it did not have as much support for the bid as it had initially reported.
Via BBD Bidco, the investment vehicle being used for the takeover, TDR said on Thursday morning it in fact now had 36.69% support for its bid. It needs 75% support for the acquisition.
Possible merger arbitrage buyer
Woodford is currently trying to free up liquidity in his £3.5bn Equity Income fund to meet investor redemptions, including the £250m sought from Kent County Council, which triggered the open-ended fund’s suspension.
The details of the buyer have not yet been revealed but an investment manager Portfolio Adviser spoke with suggested it could be a merger arbitrage firm. Woodford appeared to sell most of his stock at 241p while the bid on the table is 243p. Based on the 51,597,494 shares he sold he would have raked in £124.3m for his gated fund.
BCA Marketplace is due to pay a dividend of 6.65p in September. Combined with the lower price he secured for his shares, that means Woodford could have forgone £4.46m in order to have secured the cash early. Even if the deal goes ahead, it could take months to complete.
Hargreave Hale has offered irrevocable support for the deal, as has Invesco on some of its shares, while offering a letter of support on its remaining shares alongside Axa IM and Aviva Investors.
