UKAug 29 2017

Woodford turns to IPO market in search of returns

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Woodford turns to IPO market in search of returns
ByDavid Thorpe

Neil Woodford, nursing a series of bruises as several of his FTSE 100 investments have encountered turmoil, has switched focus to a £54m market cap company that has only recently come to market.

Mr Woodford has recently been forced to defend some of his flagship large cap holdings, including Provident Financial and Astra Zeneca, which have suffered steep share price declines in recent weeks.

Now he has turned attention to GYG, or Global Yachting Group, a company which provides services to the owners of yachts, and is now listed on the Alternative Investment Market (Aim) in London.

In an update, Mr Woodford said: “The company is the leading provider of painting and refit services to the superyacht industry. It is a cash generative business, which is expected to pay an attractive dividend and support a progressive dividend policy going forward.”

The company is headquartered  in Palma, Mallorca, and operates in Europe and the United States.

GYG was formed in 2014 following the merger of two superyacht service businesses: Pinmar and Rolling Stock (established 1989).

Its shares now make up 1.3 per cent of Mr Woodford's £723m Woodford Income Focus fund. 

Oliver Brown, who runs the £10m MFM UK Primary Opportunities fund, which is rare in that it is set up purely to invest in UK IPOs, has chosen not to invest in Global Yachting Group.

He said he is concerned the current strong cashflows of the company, a feature of the investment case highlighted by the management of Global Yachting Group in their pitch to investors, may not prove durable in times of economic stress, given the exposure of the business to high net worth individuals.

Philip Milton, who runs Philip J Milton and Co, an advisory firm in Devon, said he has not invested in the funds run by Neil Woodford for many years.

He feels it is impossible for fund managers to run such large amounts of money as is presently in the Woodford Equity Income fund, and many other equity income funds, effectively.

Mr Milton said the problem with funds such as Mr Woodford is they become too large to be able to deploy the strategy that made them effective in the first place.

The Woodford Equity Income fund has assets of £10bn. The fund has lost 1.1 per cent over the past year, compared to a return of just over 10 per cent for the sector as a whole. 

David.Thorpe@ft.com