WPCT leaves investors guessing over unquoted writedown

Analysts attempt to decipher which company caused a 4p hit to NAV

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Information-poor analysts are speculating on which company in the Woodford Patient Capital Trust was large enough to trigger a 4p reduction in the net asset value of the investment trust.

The unspecified company was marked down based on a valuation conducted by the authorised corporate director Link and IHS Markit.

WPCT said in a regulatory filing, filed on Thursday evening, that Link intends to reduce the valuation of one of the company’s holdings with a 4p hit to the company’s net asset value. The share price fell 3.7% during early morning trading on Friday.

However, the WPCT board would not say which company had been revalued, citing confidentiality obligations. It said would “provide a further update to the market when able to do so”.

That left the market speculating about what company had been valued downwards.

A JP Morgan Cazenove analyst note said uncertainty around WPCT valuations was one of the main reasons the trust shares trade at a large discount to NAV.

Benevolent AI, Oxford Nanopore, Atom Bank (Crossco), Industrial Heat, Immunocore and Oxford Sciences were among the companies its analysts thought could have been subject to the writedown. Industrial Heat had already wiped 3.4 pence per share off the NAV in August.

“To state the obvious, for the decline in value for one portfolio company to cause a 4.0pps reduction in the WPCT NAV means it must have been one of the larger portfolio positions to start with.”

The JP Morgan note said the discount largely prices in the uncertainty.

“Irrespective of which company is the one referred to in today’s statement this is clearly disappointing for WPCT shareholders and likely begs further questions as to what might occur for the valuations of the remaining unquoteds should they be re-evaluated in detail by Link.

Kepler this month said it saw no trigger to prompt the discount to narrow.

WPCT largest holdings

Percentage (%)
Benevolent AI8.93
Proton Partners International7.83
Oxford Nanopore7.54
Atom Bank7.31
Autolus6.87
Industrial Heat6.32

Source: Trustnet updated at 31 May 2019

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