Investments  

What Woodford's new venture might look like

His representatives say the old Woodford Investment Management business is “an ongoing business”. But now there is a new chapter: Woodford Capital Management. 

While this may have echoes of a Greek tragedy – a once successful man, failing spectacularly, and now trying to regain the reputation he lost – Woodford is adamant that he is on track to establish the new venture. Investors, particularly the many still nursing heavy losses from their WIM investments, are looking on sceptically.

So, what does this new investment business entail? And should it be taken seriously?

The new business is registered in Jersey. Woodford's representatives say they “intend to work with institutional investors, high-net-worth individuals and family offices, and Jersey is a well-respected and established offshore centre”. 

The company also has an office in Marlow, in Buckinghamshire. 

Woodford representatives note the first line of business is advising a private equity company on the portfolio of unquoted assets they bought from Woodford's old fund business. There is some debate over whether this amounts to a new fund, with Woodford's representatives insisting that it is not.

It is also unclear what role the old WIM business will play in future.  

However, given the new focus on institutional and family office clients, one approach that may be coming is the creation of limited liability partnerships.

LLPs are collective investment vehicles, which are not funds,but which are used in the private equity sector. The fact the new products will not offer daily liquidity also points towards it being closer to a private equity model than a mutual fund.

Woodford has said his next product will not have daily liquidity, as he now accepts the ability of the investor to withdraw their cash at one day's notice is not conducive to investing in early stage and illiquid assets. 

In a LLP structure, a new vehicle is set up for each investment or small group of investments. Each client would then be made a 'partner' in the new investment, with Woodford Capital Management being the general partner or managing partner in each of the separate investment structures. 

Apart from not permitting daily dealing, the second advantage in terms of liquidity, is that if a client wants their money back, they can only get it from the partnership in which they are invested; all of the other partnerships operate separately, even if all were to be managed or operated by Woodford Capital Management. 

Partners

In terms of fees, there are two approaches. In a limited partnership Woodford Capital Management would receive a substantial return if the return is above a certain level, known as a 'hurdle rate', which could be 10 per cent.