Woodford Investment Management  

Fresh blow for Woodford over £270m holding

A company in which Neil Woodford has a £270m holding is set to see its valuation slashed in another set-back for the embattled fund manager.

Link Fund Solutions has announced it will reduce the valuation of one of Woodford Patient Capital Trust’s holdings — a move which was expected to impact the trust’s net asset value by approximately 4p per share — though it has not named the holding.

It has since been reported, initially by The Sunday Times, that tech firm Benevolent AI — which features in both Mr Woodford’s Equity Income fund and Patient Capital trust — is to receive an investment from Temasek which halves the company's valuation and is therefore the unnamed holding.

Benevolent AI, of which former government minister Joanna Shields is chief executive, was valued at $2bn (£1.6bn) in April of last year but it is understood Temasek’s new investment ranks the firm at half this figure.

The tech company is the biggest holding within Woodford Patient Capital — accounting for 9.81 per cent of the fund, according to data from Hargreaves Lansdown — after Mr Woodford invested £76.1m in the firm.

Shares in the trust fell from £4.71 before the stock exchange notice to around £4.32 after it was issued but they have since bounced back slightly to around £4.50.

Just last month (August 23) investors in the trust faced another reduction in their investment when shares fell by 6 per cent over a revaluation of on of the trust’s unquoted holdings, IH International.

But recent data from the Association of Investment Companies showed advisers still backed the trust and thought the shares were a buy, despite suspicions over the true value of the underlying investments.

It showed the shares were trading at a discount to net asset value of 41 per cent — described as "seemingly chasmic levels" — and could therefore be a good investment. 

Benevolent AI is also the sixth largest holding in Woodford’s suspended Equity Income Fund, accounting for 4.48 per cent of the fund with about £194m invested in the firm.

If the holding in question turns out to be Benevolent AI, it will reduce the value of the funds at a time when he is battling to sell hundreds of millions of pounds worth of shares to raise sufficient cash to open the fund and meet expected redemption requests from investors.

The fund was initially suspended for 28 days on June 3 following a period of sustained outflows of about £9m per working day in May but it has since been announced the fund will remain suspended until at least the beginning of December. Its authorised corporate director recently confirmed the fund had lost 11 per cent since June.

imogen.tew@ft.com

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