A brief stock exchange announcement this morning revealed that Schroder UK Public Private (SUPP) Trust is dropping Link Fund Solutions as its alternative investment fund manager.
It will instead use Schroder Unit Trusts.
Schroders picked up the trust, previously known as Woodford Patient Capital, in October 2019 and has been managing the portfolio since December of that year.
Pending regulatory approvals, the switch will come into effect from 30 September.
A spokesperson for Schroders told Portfolio Adviser the move, while not made public before now, forms part of its strategy to “bring the AIFM and administrative support for the company in line with Schroders’ operating model for its wider investment trust business”.
“The decision to bring all strategies into an integrated operating model was taken in 2018 and has been slowly rolled out across our range at various times dependent on when is appropriate to do so.”
See also: Schroders plans £250m UK public/private trust less than a year after landing Woodford mandate
Acquisition overtures and legal action
The appointment of Link as AIFM took place before Schroders picked up the trust, so Evelyn Partners’ managing director – corporate affairs, Jason Hollands, is not surprised by the change as “it brings it in-line with other trusts where Schroder is a manager”.
He added that, “this may well be a tidying up of loose ends rather than dissatisfaction with Link, per se”.
“Though if they were reviewing their longer arrangements, the fact that Link Group has been the subject of a bid, may well have been a factor.”
In November 2021, Australia-headquartered private equity group Carlyle put in a fresh offer for Link Group.
The A$2.81bn (£1.6bn) bid was the second overture it had made for the shares and fund administration business, having spearheaded a consortium of private equity firms pursuing a deal in October 2020.
But the change also comes at a time when Link is under increasing pressure to justify its actions ahead of the implosion of Neil Woodford’s eponymous equity fund, and subsequently his company, in 2019.
Last month, Portfolio Adviser reported that law firms Leigh Day and Harcus Parker have combined their legal actions against Link to have a better change of recouping losses for thousands of investors still trapped in the collapsed Woodford Equity Income fund.
Both firms allege that Link mismanaged the £3.6bn fund, which is entirely separate to SUPP, and failed to maintain appropriate levels of liquidity.
The authorised corporate director (ACD) denies any wrongdoing.
See also: Woodford investors dealt £24m blow as Rutherford Health implodes
SUPP trading at 44% discount
SUPP’s share price currently sits at a historic low of £20.25, having lost 38.8% since the start of the year.
Compared to its net asset value, its shares are trading at a hefty 44.4% discount, according to data from the Association of Investment Companies.
Launched in April 2015, at its peak, Woodford Patient Capital commanded £115.10 per share. When Schroders cinched the mandate in October 2019, it traded at £37.50 per share.
In full year results published in April, the board revealed plans to broaden the £327m trust’s investment universe to include global private equity investments in a pivot away from its traditional UK hunting ground.
Chair Tim Edwards said the move would allow Schroders to leverage its track record and experience investing globally.
He added the board would continue to review initiatives to tackle the trust’s “frustrating” discount, floating share buybacks as a possibility.
See also: Investec maintains sell rating on ex-Woodford trust despite strategy change
