Link in talks to sell fund solutions business

Search sponsored by
Link in talks to sell fund solutions business
Pexels/Kindel Media

Link Group is in negotiations with a specialist asset manager to sell its fund solutions business, as it moves closer to a redress agreement with the Financial Conduct Authority over the Woodford Equity Income Fund.

In a statement to the Australian stock exchange this morning (February 20), Link Group, parent company of Link Fund Solutions, said it is in exclusive negotiations with the Waystone Group to sell the fund solutions business.

This sale would exclude any Woodford-related liabilities and is subject to a number of internal approvals.

Link Group has given Waystone until the end of March this year to finalise legal agreements.

In the statement, Link Group said it expects a non-cash impairment charge of around $449mn (£373mn) in its financial results for the year to December 31 2022, and if the sale of Link Fund Solutions goes through, it will not receive any net proceeds.

The group said its liquidity position remains strong and it expects to report operating Ebit of $80mn (£66mn) for the first half of 2023.

Both Link Group and the FCA confirmed this morning that they are in “advanced discussions” to work out if they can agree on enforcement action against Link Fund Solutions.

The FCA said it is focused on ensuring that customers impacted by the failure of the Woodford fund receive redress, and it has provided Link Group with time to ‘realise assets’.

Link Fund Solutions was the authorised corporate director of Woodford Investment Management, and last year the FCA issued a draft warning notice fining the firm £50mn for its part in the collapse of the equity fund.

Link Fund Solutions is also liable for £306mn in redress to the fund’s investors.

Last year, a takeover attempt from Canadian firm Dye and Durham failed after the FCA warned its approval of the takeover was conditional on the acquiring company being able to make up any shortfall in Link Group's ability to pay any redress imposed.

Fund collapse

As the authorised corporate director of Woodford Investment Management, Link has been under investigation by the FCA since the collapse of the Woodford Equity Income Fund.

The fund, once worth £10bn, began struggling with a wave of redemption requests in 2019.

After a scramble to sell shares to improve the fund’s liquidity, Link announced in October of that year that the fund would be wound down and Neil Woodford fired. 

Thousands of investors saw their money trapped in the suspended fund and lose considerable sums as a result.

At the point of its suspension, the fund was £3.5bn in size - though it had shrunk to £2.9bn by the time capital started being repaid.