Link Group is in talks to offload its fund solutions business to Irish asset manager Waystone Group, reaching late-stage negotiations with the Financial Conduct Authority over a potential settlement to the ongoing Woodford saga.
Link Fund Solutions (LFS) has long been embroiled in a legal dispute over its role in the collapse of the Woodford Equity Income Fund (Weif). In September last year, the FCA hit LFS with a £50m fine, and ordered that up to £306m be set aside to repay those investors still trapped in Neil Woodford’s (pictured) defunct fund.
After denying the FCA’s charges last year, Link appears to be making concessions, and is expecting to recognise a non-cash impairment charge of $449m (£258m) in its financial results for the half year ended 31 December 2022.
In an announcement on the Australian Stock Exchange, Link said it was likely to receive no net proceeds by selling LFS to the Waystone Group.
However, the sale is still contingent on a settlement with the FCA, and in order for the settlement to go through, LFS must arrange a scheme to resolve all of its Woodford-related contingent liabilities and redress obligations.
The FCA reiterated its focus on ensuring that consumers affected by the suspension of the Woodford fund obtain redress, and the regulator said that, in order to assist a resolution, it has provided time for Link to realise assets, including Link Group held assets, to meet its concerns.
The FCA added: “We know that affected investors will be keen to understand what impact this may have on them, including how any proposed scheme of arrangement would work. We will provide a further update as soon as we are able to.
AJ Bell’s head of investment partnerships Ryan Hughes said that Weif investors will be grateful to see some progress in the investigation, but they have seen a false dawn before; Link’s acquisition by Canadian software company Dye & Durham fell through last year after the FCA failed to greenlight the deal.
Link also tried to temper expectations in its stock exchange announcement, adding: “No legally binding agreement has been reached with either Waystone or the FCA and at present there can be no certainty that any of such agreements will ultimately be concluded.”
AJ Bell’s Hughes pointed out that, either way, it will still be some time before investors receive any redress, as the process and structure of any such payments will need to be determined.
He added: “Nearly four years has now passed since the suspension shocked investors, and with parts of the portfolio still not liquidated, investors will rightly feel that this debacle has dragged on long enough. Hopefully, these developments indicate that we may finally be closer to seeing this sorry chapter coming to a close.”
