Investors trapped in the former Woodford Equity Income fund have taken a hit as the latest sale of assets from the portfolio show the fund is now valued at £444m.
In a letter to investors, published today (June 5), Link Fund Solutions said it had agreed to sell 50 per cent of the fund’s remaining assets to US-listed Acacia Research for a £224m price tag.
Link stated: “We are now able to confirm to investors in the fund that we have reached agreement with Acacia Research Corporation for the sale of an agreed selection of up to 19 of the fund’s healthcare assets in return for £223.9m.
“This...will enable us to make further capital distributions to investors in due course. We are currently unable to confirm the exact dates and amounts in respect of these further capital distributions but will [issue an] update no later than July 29.”
Investors in the now-defunct Woodford Equity Income fund have already received more than 75 per cent of their assets from payouts in January and March, primarily from the quoted, sellable part of the portfolio.
Although today’s announcement may provide comfort for investors as it marks a sale of some of the mandate’s illiquid and unquoted assets, Link’s update also showed the fund had decreased in value once again.
The letter stated the fund’s net asset value, as calculated on June 3, 2020, to stand at £444m — £114m less than the £558m estimated by Morningstar as at May 20, 2020.
Link did not confirm whether the agreed price for the assets had seen the overall value of the fund drop. Investors everywhere have also taken substantial hits as markets have tumbled due to the coronavirus crisis.
Read more: One year on — what has happened since the Woodford saga began?
There have been reports of potential buyers for the group of healthcare assets involved in today's sale since it was announced the fund would be wound down.
In November, Sky reported WG Partners was eyeing a £500m deal with the Link over the assets while Neil Woodford himself was said to be in the early stages of forming a consortium to buy up the unquoted assets trapped in his old fund.
Ryan Hughes, head of active portfolios at AJ Bell, said today’s news would be “cautiously welcomed” by investors.
He added: “However, there will no doubt be huge frustration at the valuation achieved by Park Hill, which has been managing this process, given the valuation may be lower than other offers that had reportedly been received and rejected previously.
“This highlights the very real problem of being a forced seller with all potential purchasers knowing that Park Hill and Link were in no position to try and push the price higher.”
Meanwhile Adrian Lowcock, head of personal investing at Willis Owen, said: “Rather disappointingly there is no detail on what was sold, for how much and what the losses were on those investments.
“Investors should be given an idea of what the costs incurred for this deal are and what they could expect to see back. It would also help to have an update on the progress with the remaining investments, but these are most likely the ones that the fund will find hardest to sell.”
Investors have been unable to withdraw their cash from the fund since it was suspended on June 3 last year. It had been struggling with a sustained period of outflows and was unable to meet the requested redemptions.
On October 15, Mr Woodford was fired from the fund before walking away from his two remaining investment vehicles. By the end of the day, he had announced his investment firm Woodford Investment Management would close. Over the past year, the fund has lost 37 per cent.
imogen.tew@ft.com
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