Link Fund Solutions has claimed it had no knowledge of Neil Woodford’s relationship with Acacia Research, the US investor that scooped up a handful of assets in his former Woodford Equity Income fund at deeply discounted price.
Last June the authorised corporate director of Woodford’s former fund, now called LF Equity Income, struck a deal with Acacia to offload 19 of the fund’s healthcare assets at a cut price of £223.9m.
The deal 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.
Woodford revealed in an explosive interview with the Sunday Telegraph he had been advising the California-based investor on the portfolio of assets it acquired since the summer and that the remaining stocks would form the “cornerstone” of a new strategy to rebuild his investment empire.
See also: Industry dissects the many unknowns of Neil Woodford’s comeback
Link denies knowing about Woodford-Acacia relationship
Addressing this controversial plot twist, Link told trapped shareholders it had “not become aware of the relationship between Woodford and Acacia” until the interview in the Sunday Telegraph.
In the letter to shareholders dated 31 March the ACD reiterated that Woodford and Woodford Investment Management ceased to have any involvement with LF Equity Income from October 2019 when it announced the fund would be wound-up.
“Our primary objective during the fund’s wind up is to sell the assets in a way that represents the best interests of investors,” Link wrote.
“The transaction with Acacia was concluded after a period of external marketing by an investment bank, during which several alternative offers for some or all of the assets forming the portfolio sold to Acacia were rejected on the grounds that they did not represent the best outcome for investors in the fund.
“After considering all relevant information, we concluded that the portfolio transaction with Acacia was the best deal for investors in the fund.”
It also questioned the timing of Woodford’s involvement on the Acacia deal, noting a report in The Times which suggests he did not advise Acacia until after the transaction was agreed.
See also: Link accused of letting further middleman chip into Woodford investor savings
Acacia deal was ‘in the best interest of investors’
Link went on to defend the deal with Acacia, arguing the price the US investor paid for the healthcare stakes represented fair value.
“We have previously written to you about the media coverage of the transaction with Acacia and the importance of recognising that the transaction was for the sale of a portfolio of the fund’s shareholdings (rather than a series of sales of individual assets),” the ACD said.
“We would like to point out that the values attributed to individual assets were allocated by Acacia and, in the context of a portfolio transaction, the reported gains on the later sale by Acacia of some individual assets can be misleading.
“We assessed the value of the portfolio as a whole and continue to believe the transaction with Acacia was in the best interests of investors.”
Several of Woodford’s former healthcare stocks that were sold to Acacia have enjoyed a startling reversal of fortunes since the coronavirus pandemic. Synairgen saw its share price soar 550% one month after Acacia purchased it, while Kymab saw its valuation skyrocket after French pharmaceuticals giant Sanofi agreed to buy it for $1.5bn (£1.09bn).
Oxford Nanopore, which Acacia bought a 6% stake in from Link last summer, has just announced plans to float on the London Stock Exchange in a deal valued at $5.4bn (£3.9bn).
No update on fifth payout
Link said it could not provide a timeline on further capital distributions but would continue to find ways of realising the value of the remaining assets while protecting investors and not conducting a fire sale of assets.
Beleaguered investors in LF Equity Income have received £2.54bn of their money back since the fund’s wind-up commenced nearly a year and a half ago.
As at 26 February 2021, following the fourth payout which included the last of the proceeds from the Acacia sale, the fund’s remaining assets were valued at £164.2m.
“Since the commencement of the fund’s suspension we have acted in the best interests of investors and we will continue to do so,” it said.
“This means that, although we are committed to returning cash to the fund’s investors as soon as possible, we will only accept offers for the remaining assets where they represent a good deal for the fund’s investors.”
Law firms Harcus Parker and Leigh Day are both pursuing claims against Link for its role in the collapse of Woodford’s former fund, with Harcus Parker vowing to take the ACD to court before the summer.
Last week, litigation specialist RGL Management launched formal proceedings against Hargreaves Lansdown and Link over the Woodford saga.
See also: Hargreaves looks set to dodge a bullet as litigators home in on Link over Woodford collapse
