Ex-Woodford trust plots global pivot to tackle ‘frustrating’ discount

SUPP’s discount has widened to 37% despite progress to reduce debt and rebalance the portfolio

Schroders UK Public Private (SUPP) is seeking to change its investment policy to be able to invest globally in the latest pivot for the former Neil Woodford trust.

The £364.9m trust, formerly known as Woodford Patient Capital, has historically invested in venture and growth stage companies in the UK.

While the board said it continues to see “significant opportunity in the UK”, it is also keen to leverage manager Schroders’ track record and experience investing globally.

“The portfolio manager has unparalleled access to a global universe of top-quality opportunities, and we want to be able to leverage this to give our investors exposure to the best venture and growth companies in the world,” chair Tim Edwards said.

If the proposals are greenlit, SUPP will seek out global private equity investments that have potential to deliver greater than 2x returns over the medium term. Around three quarters of the portfolio will be in unlisted companies, while the remaining quarter will be held in public equities.

Shareholders will vote on the proposals at the trust’s AGM on 18 May.

SUPP’s ‘frustrating’ discount

Managers Tim Creed (pictured) and Richard Doig have been attempting to put their own stamp on the trust since inheriting the mandate from Woodford following the collapse of his funds empire in late 2019.

In addition to rebalancing the portfolio and getting the trust’s debt under control, the pair have initiated several new private investments in the portfolio, including Attest and Ada Health.

“Frustratingly” this progress has not been reflected in the trust’s share price, which remains in the doldrums, Edwards lamented.

At the end of December, shares were 31.2% lower compared to NAV and the discount has widened further to 36.7%, according to data from the Association of Investment Companies.

“The board continues to review various initiatives to improve this situation including the possible use of share buy-backs,” Edwards said.

Legacy Woodford holdings boost NAV

However, it was the trust’s legacy Woodford holdings that did most of the heavy lifting last year, driving NAV growth of 37.4% over the period.

Most of this was down to Oxford Nanopore’s blockbuster IPO, which resulted in a fair value gain of £104.6m. SUPP’s stake was worth £162m at the end of December and accounted for 36.9% of total assets.

Immunocore, which also went public during the period, was another positive contributor to performance, and SUPP also benefited from the sales of Inivata and Kuur Therapeutics.

Gearing in the portfolio fell dramatically over the year from 31.6% at the end of December 2020 to just 0.7%. Creed and Doig retain access to a £40m revolving credit facility which will be used prudently to smooth cash flows and provide operational liquidity on a short-term basis.

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