Link has freed up £223.9m to return to investors trapped in Neil Woodford’s flagship fund after striking a deal to sell a bundle of biotech stocks at a massive discount.
The authorised corporate director wrote to trapped Woodford Equity Income shareholders confirming it had sold 19 of the fund’s healthcare assets to Acacia Research.
The sale represents around 50% of the fund’s current net asset value of £442.2m, as calculated on 3 June.
Link did not disclose which holdings had been sold off but said assets included in the sale were liquid stocks from Portfolio A, being sold by Blackrock, and illiquid companies from Portfolio B, which is being wound up by PJT Partners.
The sale will enable Link to make further capital distributions to investors though the ACD was unable to confirm when and how much money would be returned to shareholders. It will provide an updated timeline for the next distribution no later than 29 July.
One year on from the suspension of the Woodford Equity Income fund, the ACD has returned £2.3bn to investors, representing around 80% of the fund’s assets.
Update provides scant detail on losses suffered
Willis Owen head of personal investing Adrian Lowcock was disappointed by the lack of detail in the update to investors.
“Rather disappointingly there is no detail on what was sold, for how much and what the losses were on those investments,” he said.
“Investors should be given an idea of what the costs incurred for this deal are and what they could expect to see back.
“It would also help to have an update on the progress with the remaining investments, but these are most likely the ones that the fund will find hardest to sell.”
Lowcock thinks investors could receive the next round of payments some time in August.
The final sale price is slightly lower than the initial reported offer of £239.7m and is less than half of what Woodford was willing to pay for the portfolio in March, several weeks into the coronavirus sell-off.
Woodford and his business partner had sought to pay £500m to buy back his biotech holdings, raising funds from institutional investors, after a deal with WG Partners to snap up the bundle for £550m fell through in February. Even that price was calculated to be 55% of the companies’ value at their peak worth.
Lowcock said: “It is frustrating for investors in Woodford, but unfortunately winding up funds is a messy business, especially when it involves illiquid assets at a time when the UK faces the deepest recession in history.”
