‘Perfect storm’ for Woodford as another unquoted firm plans IPO

Another Neil Woodford-majority owned firm has announced plans to float as the heavy-weight manager nears the regulator’s 10% limit on unlisted holdings.

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News broke on Tuesday that British biotech firm Autolus, which Woodford owns roughly 22% of, had filed with the Securities and Exchange Commission to pursue a listing in the US.

The company appears in both Woodford’s Patient Capital trust and flagship equity income fund, comprising a 4.09% and 0.12% holding, respectively. He also owns a 30% stake in its parent company Arix Biosciences.

It is the second of Woodford’s unlisted holdings to plot an IPO this year.

Two weeks ago, reports surfaced that investment platform, AJ Bell, which the star manager owns an 8% stake in, would be listing at some point this year.

The successive listings of two of his unquoted companies is happening at a significant time for Woodford. At this point, the manager has reached the Financial Conduct Authority’s 10% hard limit on owning unquoted securities.

Meanwhile, the LF Woodford Equity Income fund has continued to see outflows, falling from £7.1bn at 20 February to £6.8bn as at 7 March.

But Darius McDermott, managing director at Chelsea Financial Services, said the flurry of potential IPO activity occurring while Woodford has reached his level of unquoted firms is “a bit of a perfect storm”.

“The fact that they are at the 10% limit is a bit of a perfect storm, isn’t it? Because the unquoted companies did very well, the quoted companies did less well, and they were in redemption so you couldn’t have picked a better climate to get near that 10% limit.

“They bought Autolus at £25m. It’s currently on the books at £60m and that’s pre-IPO, so it has been a successful investment, and they may well make more off it in the future.”

And with an uptick in IPOs within the biotech sector already this year and several notable takeovers, McDermott thinks this won’t be the last Woodford-backed company to float.

“I don’t know how many unlisted companies Neil has in total, but he is going to expect a certain number of them to IPO at some stage every year. They had less last year, they’re probably going to have more this year, particularly given the market environment is better for biotech firms this year.”

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