Woodford investors face longer wait times as Link struggles to ditch illiquid biotech names

Benevolent AI and Atom Bank among the £124m in assets left to be sold

Beleaguered investors in the Woodford Equity Income fund could be waiting until 2022 before they get their money back as Link Fund Solutions struggles to offload some of the fund’s hard-to-trade biotech names. 

Link had cautioned shareholders stuck in Neil Woodford’s former fund in March that the assets yet to be sold represent the most illiquid holdings and, as such, might not be sold until late 2021. 

But in an update on 2 August, the authorised corporate director seemed to push this timescale back further, stating “it is hoped that the sale of the remaining assets will be concluded in 2022”. 

“You are reminded that we have now sold the majority of the fund’s assets and it is anticipated that the sale of the remaining assets will continue, but at a pace which is commensurate with seeking to achieve the best outcome for investors,” Link told investors. 

“This means that we are unable at this time to provide a specific date by which the fund’s wind up will be complete and all cash returned to investors.” 

Link promised to make a fifth payout to investors “when there is sufficient cash to do so”. So far, the ACD has paid back £2.54bn to investors via four capital distributions since the wind-up began in October 2019. 

But trapped investors haven’t received a penny in nearly seven months, with Link distributing the proceeds from the sale of the remainder of a basket of healthcare assets to Acacia Research last December.

See also: Link addresses reports Woodford advised Acacia on £224m biotech sale

Woodford favourites Atom Bank and Benevolent AI proving difficult to sell

Link revealed at the end of July the fund had stakes in eight different companies and one cash fund totalling £123.57m. 

The companies in question are: 

  • Atom Bank 
  • Benevolent AI  
  • Cambridge Innovation Capital 
  • Mafic 
  • Nexeon 
  • RM2 
  • Rutherford Healthcare 
  • Sabina Estates 

Sabina and Benevolent AI were both listed on the Guernsey Exchange but were de-listed shortly after Woodford Equity Income’s suspension.

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. It invested £700,000 during the 12 months to 31 March 2021 and since then has ploughed a further £1.5m into the company which has enabled it “to simplify its corporate structure, to meet required cashflow and appoint an investment bank to progress the company to the next stage of its growth”.

Elsewhere the fund invested £0.3m last month in Origin, a clinical biotechnology company that is seeking to develop and commercialise a technology that delivers therapeutic doses of nitric oxide to treat wounds.

Link said it does not anticipate the fund making any further investments.

Blackrock and PJT receive nil fees for wind-up services

Separately Link noted in the fund’s annual accounts that fees associated with the wind-up had gone down dramatically in the last year.  

Though Link has not taken any fees for its services as the fund’s ACD since the fund went into wind-up, millions of pounds have been paid out to various third parties assisting with the liquidation.  

Investors paid out £16m in fees between 15 October 2019 and 30 March 2020, £11m of which went to Blackrock for its hand in selling down the fund’s liquid stocks and £3.2m which was scooped up by PJT Partners for offloading the fund’s harder-to-trade illiquid assets.  

Debevoise & Plimpton, which provided legal support for the unquoted sales, earned £2.5m in fees. 

But in the year to 31 March 2021 transaction costs for Blackrock and PJT Partners was nil, according to the latest annual report.  

Link plans to update investors by 30 November 2021 on the fifth capital update.

See also: ‘Mind boggling’ Woodford wind-up fees show system needs overhauling

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