The Woodford Patient Capital Trust has been accused of slow progress on the sale of investments as it hands the reins to Schroders and rebrands as the Schroder UK Public Private Trust.
The board revealed on Friday its credit facility had been reduced from £150m to £112.9m, the latter being the amount currently drawn. Gearing on the investment trust, which as of Monday trades under the ticker SUPP, is 23%, according to the Association of Investment Companies.
The discount on the £612.8m trust is -37.9%.
Investment trust takes its time selling down companies
JP Morgan Cazenove said in a note “this implies there has been no further progress in terms of selling investments from the portfolio” since the last update on the credit facility three months ago.
The amount drawn from the credit facility was £111.1m, according to an update on 26 September. That was down from £116m at the end of June due to the sale of two unquoted investments, ADV and Ultrahaptics.
Portfolio Adviser is waiting for a response from the investment trust about why the amount drawn from the credit facility has increased by £1.8m since September.
The progress revealed in the latest update was “a little disappointing”, said JP Morgan Cazenove.
Slow progress on the investment trust portfolio mirrors the lack of sales in the illiquid and unquoted holdings in the Woodford Equity Income fund, which Blackrock and PJT Partners are responsible for selling as part of the fund’s wind-down.
Authorised corporate director Link revealed on Friday that while 80% of the liquid portfolio had been sold, 44% of the portfolio is yet to be liquidated. Like the Woodford Patient Capital Trust, the open-ended fund has also now been rebranded to the LF Equity Income fund.
Borrowing restrictions dropped as trust moves from Woodford to Schroders
But the extension of the term of the credit facility for an extra 12-months to 15 January 2021 was positive, JP Morgan said.
The interest rate remains at Libor +1.5% and Northern Trust has also removed limitations on the borrowing base, which previously based the amount borrowed on a calculation looking at both the unquoted and quoted holdings.
The board said this gives the fund managers more flexibility as they seek to reduce gearing.
In the aftermath of the Woodford Equity Income suspension, Northern Trust introduced tighter borrowing limits requiring Neil Woodford to seek permission before making any investment.
The board confirmed in October that Schroders would take over from Neil Woodford by the end of the year.
