Link Fund Solutions learnt about Neil Woodford’s relationship with US investor Acacia Research in the press, the authorised corporate director has claimed.
In today's (March 31) update to investors in the LF Equity Income fund – formerly run by Woodford – Link claimed it was not aware of the relationship the manager had with Acacia.
Instead, it stated the firm was only made aware of the relationship on February 13, 2021 following a story in a weekend broadsheet newspaper.
In December 2020 Link oversaw the sale of a portfolio of the fund’s healthcare assets to Acacia for £223.9m as part of the wind-up of the portfolio. Reports then claimed Acacia had swiftly sold these stocks on for a profit.
Subsequent to that, in February 2021, Woodford revealed details of his new venture, Woodford Capital Management Partners, of which Acacia was named as the first official client.
Speaking to the newspaper at that time, Woodford said he believed the assets that were sold by Link to Acacia were valued by the firm at £690m.
He claimed that, if those valuations were accurate, clients of Acacia had gained £461m at the expense of clients in the Woodford funds, who received the lower sum.
But Link believes the reported gains on some of the assets were potentially “misleading”.
It has also denied any prior knowledge of the relationship between Woodford and Acacia.
Link stated: "You may be aware of recent media reports on the Acacia transaction stating that Neil Woodford, the former
investment manager of the fund, has been advising Acacia on the portfolio of assets it acquired from the fund.
"We did not become aware of the relationship between Woodford and Acacia, a US-listed entity, until this was published in The Sunday Telegraph.
"Further media reports have suggested that Woodford did not advise Acacia until after the transaction with Acacia was agreed."
Link added: “Our primary objective during the fund’s wind up is to sell the assets in a way that represents the best interests of investors.
“The transaction with Acacia was concluded after a period of external marketing by an investment bank, during which several alternative offers for some or all of the assets forming the portfolio sold to Acacia were rejected on the grounds that they did not represent the best outcome for investors in the fund.
"After considering all relevant information, we concluded that the portfolio transaction with Acacia was the best deal for investors in the fund.”
There is still no end in sight for investors stuck in the fund.
As of February 26, 2021, the fund’s NAV is £164m. Link could not provide details of a further distribution and has advised investors this may not be until late 2021.
In recent weeks, scrutiny of Woodford has intensified with further legal action being initiated. On March 22, a lawsuit was launched, which also addressed Link due to its alleged shortcomings in administering and managing the fund.
While that was not the first law firm targeting Link, it is the first case of legal action to be directed at Hargreaves Lansdown, the D2C platform whose customers held a sizeable amount of Woodford Equity Income.
The affair has also prompted campaigner Gina Miller to call on MPs to launch an independent investigation into the collapse of the Woodford Equity Income fund, amid claims investors had lost faith in the supervision of the industry.
Jon Yarker is a freelance reporter for FTAdviser
