Schroders will take over as manager of the Woodford Patient Capital trust and, unlike the previous manager, will charge a 1 one per cent fee.
Previous manager Neil Woodford, who closed down his fund house and resigned as the trust's manager earlier this month, launched the fund in 2015 and agreed to take no management fee, and to only take a performance fee if the trust returned 10 per cent in a year, which never happened during his tenure - meaning he managed the trust for no fee for four years.
This morning the trust's board of the trust confirmed that a head of terms agreement has been signed with Schroders.
The trust will be renamed the Schroders UK Public Private Trust and Schroders will receive a fee of 1 per cent of the assets up to £600m and 0.8 per cent on any assets above that amount.
Schroders will not receive any management fee for the first three months and no performance fee until at least 2022, although after that, a performance fee will be paid if the trust returns 15 per cent above the 77p net asset value of the investments in the trust.
Susan Searle, the trust's chairman, said: "Following a competitive process, we are delighted to be appointing Schroders as the company's portfolio manager. Its careful and considered long-term approach to investment, backed by its substantial research resources in both public and private assets, makes it the natural choice to manage the company's portfolio.
"I would like to thank our shareholders for their support throughout this process as we have worked to put in place the right portfolio manager against the background of challenging circumstances.
"Throughout the process, the board has had a clear focus on achieving an outcome that protects and enhances long-term shareholder value and we believe Schroders is best placed to deliver this. A well-managed handover is underway to protect shareholder value and deliver long-term performance for all shareholders."
The appointment of Schroders brings to an end a lengthy saga for investors in the trust. It has lost 67 per cent in three years while its sector, the AIC Growth Capital, has lost 31 per cent.
Several of the unquoted investments made by Mr Woodford had their value written down, prompting the board to declare that the fund manager couldn’t make any new investments without first consulting the board, and then, with the level of debt rising, without consulting with the trust’s bankers at Northern Trust.
The trust trades at a discount to its net assets of 50 per cent and one of the challenges faced by Schroders will be he closure of the Woodford Equity Income fund, since that fund has a shareholding of about 9 per cent in Patient Capital.
Those shares in Patient Capital are being sold to return cash to Equity Income fund holders, which will create downward pressure on the trust's share price.