Link warns Woodford wind-up could push into 2023

Investors have been trapped in the fund for over 1,000 days

Woodford Equity Income investors may now be waiting until 2023 before they see the rest of their money, as Link Fund Solutions reveals it has made little progress in selling the fund’s most illiquid holdings.

In November, Link Fund Solutions, the fund’s authorised corporate director, told shareholders it expected to offload the remaining assets in Neil Woodford’s defunct fund by the end of 2022.

However, in its latest update published today, it admitted it could take even longer to ditch the remaining assets, which are mostly hard-to-trade biotech names.

“At this stage we are unable to provide a specific date for the fifth capital distribution or for the completion of the winding up of the fund,” Link said.

“Due to the nature of the fund’s remaining assets and our commitment to achieving the best outcome for investors it is possible that the wind up of the fund may not be completed by the end of 2022.”

Link began the wind-up process on 19 October 2019, meaning investors have been trapped in the fund, now called LF Equity Income, for over 1,000 days.

While the ACD has paid back £2.54bn to investors via four capital distributions, they have not received a penny for over 15 months, with Link divvying up the proceeds from the healthcare assets sold to Acacia Research in December 2020.

Link offloads one holding in four months

As of 15 March, nine of LF Equity Income’s holdings remain to be sold, representing £140.9m in assets.

They include:

  • – Atom Bank 
  • – Benevolent AI  
  • – Mafic 
  • – Nexeon 
  • – RM2 
  • – Rutherford Healthcare 
  • – Sabina Estates 

This is unchanged from Link’s last update in November, with the exception of Cambridge Innovation Capital, which appears to have been sold during the period.

Independent wealth expert Adrian Lowcock said he is not surprised Link have hinted at further delays in winding-up the fund.

“The last part of the portfolio is the hardest bit to sell and could take years. The macro back drop hasn’t been helpful either as the world’s economy has been shrouded in uncertainty,” he said.

Though Link has been trying to ditch the remaining holdings, it has continued to pump money into Mafic, an unlisted basalt producer in the US, due to previous financing commitments made by Woodford.

Shift to quarterly valuations signals liquidation could take ‘considerably longer’

The value of the fund’s assets has actually gone up 13% from £124.3m at the end of October 2021, which AJ Bell head of active portfolios Ryan Hughes notes is better than the FTSE All Share (+0.67%). However he added this will be “of little comfort given the longer term performance”.

“More important for investors will be wanting to get some firm commitment on when they can finally get the remainder of their money back,” Hughes said. “It’s been 15 months since investors had their last distribution which shows just how challenging it is to try and sell the remaining assets into a market where the buyers hold all of the cards.”

See also: Patience wearing thin with FCA’s snail-like progress two years on from Woodford fund suspension

The fact Link wants to move from monthly to quarterly valuations is also a bad sign that the wind-up process will take “considerably longer”, Hughes said.

“While Link will be ensuring that they get the best possible price for the assets, it’s also important to balance the time that investors are having to wait. I suspect many would by now simply accept a lower price to get the sale completed so they can draw a line under this sorry saga and move on, not least as we are now close to 3 years since the fund suspended.”

Link intends to write to investors on or around 30 July 2022 or when it is in a position to make a fifth capital distribution.

See also: Woodford directors forced to stump up as collapsed fund house expenses hit £5m

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