According to Woodford Investment Management CEO, Craig Newman, in an effort to ensure it will have to scale back investors’ share applications, the trust has issued a supplementary prospectus that brings the maximum amount that can be raised by the trust.
According to the supplementary prospectus, Neil Woodford, portfolio manager of the trust, believes the additional capital will neither impact the trust’s return prospects nor the timeframe outlined for the deployment of 60% of the portfolio’s capital into early-growth and early-stage companies. The deployment is still expected to take around two years.
However, Newman was quick to add: “Until the offer closes we won’t know whether the Trust will raise closer to £500m or £800m. But what we do know is that Neil and his team are very comfortable managing the investment strategy and deploying the eventual initial capital raised in line with the time frame set out at launch.”
What is likely to change, however, is the ongoing fee charged by the trust. In the initial prospectus, the company said, over and above the performance fee, there would be an ongoing charge of 0.35%, which would represent the running costs of the business. This figure was, however, based on the assumption of gross proceeds of £200m being raised. As more than £200m will be raised, the expectation is that this fee should come down, as running costs should not change materially as a result of more assets being raised.
Mark Dampier, head of investment research, Hargreaves Lansdown said the raised allocation further underlines the strength of the Woodford brand and added that the additional £300m does not change the “fundamental, long-term nature of the investment.”
“Whether Woodford is able to raise the full £800 million is yet to be seen, if he does it would make the company around the 40th biggest investment trust in the UK, a constituent of the FTSE 250 and a similar size to Fidelity European Values.”
