Is Link doing enough with Woodford investors still in limbo?

‘Arguably they [Link] should have taken more time selling some of the earlier holdings’

Neil Woodford

With almost £124m still trapped in the Woodford Equity Income fund, now LF Equity Income fund, investors have been told they will have to wait until at least 2022 for their money back.

So far, £2.54bn has been returned to shareholders through four capital distributions, and while unquoted assets take longer to sell, the industry has started to question whether Link Fund Solutions has really done enough to achieve the best price for investors on assets sold.

“It isn’t that easy selling unquoted investments, it takes as long as it takes unless you are prepared to accept a knock-down price,” explains Fairview Investing director Ben Yearsley. “Arguably they should have taken more time selling some of the earlier holdings looking at some of the prices achieved for those same businesses after.”

Taking a hit

In June last year, for example, Link sold eight stocks to Acacia which days later sold out of some of them completely, netting just over £750,000 in profit.

This also brought into question the significant fees that had been paid to third parties to assist in realising the assets of the fund. In the eight months after the fund began being wound up, £16m was handed over to third party brokers in fees – £11m of which was paid to Blackrock and £3.2m to PJT Partners.

In the most recent financial statement, the fees have dropped to near zero with little movement on the funds remaining assets.

Recent realised assets

In the past 12 months, the authorised corporate director (ACD) has provided a return of £282.63m of capital to investors, the majority of which came from the completion of the Acacia transaction for the sale of 18 assets that realised a total of £219.4m.

It has also sold Kymab, which was originally part of the Acacia transaction, for £4.5m; Schroder UK Public Private Trust for £12.23m; Purplebricks for £20.17m; and Cambridge Innovation Capital for £3.36m.

Included in the remaining holdings is US basalt fibre production company, Mafic, which Link has invested a further £710,000 into as a way of “preserving capital value”.

It also added £280,000 to the holding in US-based company, Origin, which is developing commercialised technology to deliver “therapeutic doses of nitric oxide to treat wounds”.

The final countdown – nine to go

 A spokesperson for Link has said the ACD’s team are concentrating on achieving the best outcome for investors with the sale of the remining assets but admitted there was “no definitive date” for the remaining £123.57m held across nine holdings to be returned to shareholders.

“It’s frustrating for investors, clearly, but there isn’t an easy way to speed the process up without taking a financial hit,” Yearsley says.

Chelsea Financial Services managing director Darius McDermott agrees investors have been left in limbo for long enough.

“This is very disappointing for investors who have been waiting a long time for their money now,” he says. “It is important that investors should be getting more clarity from Link on why the process is taking so long and that clear deadlines should be made and kept.”

He adds that it was equally disappointing for investors that the value of the fund’s investments are falling, despite listed investments being up.

Within the remaining assets are Atom Bank and Benevolent AI which were among the favourites of ex-fund manager Neil Woodford. A commentary from Link referred to the remaining assets in the fund as being “the most illiquid”.

Investors in the fund last received payment from Link in December 2020, with no concrete date as to when the fifth distribution will be made.

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