Link Fund Solutions has said Woodford Equity Income investors could see another £100m returned to them before Christmas as it hints it is close to selling the remainder of the cut-price healthcare assets to Acacia Research.
Since the last distribution on 26 August, Link said it had freed up another £27.82m to return to investors as at 27 November from transferring the last of the 19 biotech names to Acacia. But the ACD said that amount would increase to £97.62m if it completes some or all of the remaining transfers to Acacia in the next few days “as expected”.
The deal with Acacia left a sour taste in investors’ mouths when the US investor sold off several stocks in their entirety for a profit within days of taking ownership.
The proposed fourth payout represents a third of the remaining £288m worth of assets left to be sold in the fund now called LF Equity Income.
“We can now confirm that we expect to complete the transfer of the remaining assets forming part of the portfolio sold to Acacia in the next few days and, in any event, no later than 31 December 2020,” Link said in a letter to shareholders.
“Although we anticipated completing the transfer of the portfolio of assets to Acacia by 30 November 2020, our agreement with Acacia recognised that the formalities associated with transferring some of the assets may take longer to complete.”
Latest payout won’t be much of a Christmas present for trapped investors
Assuming it realises the full £97.62m from the Acacia sale, Link will have returned £2.54bn to investors since the wind-up kicked off over a year ago.
AJ Bell head of active portfolios Ryan Hughes said the next tranche, due to be paid out on or around 11 December, “won’t represent much of a Christmas present given the scale of overall losses on the fund for many investors”.
Beleaguered unit holders have already shelled out £16m to the administrators charged with winding-up the fund so far, on top of heavy losses sustained by the fund during the wind-up process.
Blackrock, which has been tasked with selling down the listed stocks in Portfolio A, has raked in close to £10m since the liquidation of Neil Woodford’s former flagship fund began on 15 October, while PJT Park Hill is due to collect £3.2m in fees after selling down the fund’s harder to trade assets, including the £224m of stocks in the Acacia deal.
See also: ‘Mind boggling’ Woodford wind-up fees show system needs overhauling
Link remained tight-lipped on how long it would take to sell down the remaining assets in its latest update to investors. But it reiterated that sale of the remaining assets which are “less liquid” might not be realised until mid to late 2021.
This means investors will have been waiting more than two years to get their money back since the fund suspended on 3 June 2019 and possibly since the wind-up process began on 15 October 2019.
Link said it would write to investors on 9 December confirming the total amount in the fourth distribution. If the proceeds from the Acacia sale are not received before the calculation date on 3 December the ACD will make a fifth distribution in early 2021.
