The potential sale of the administrator of the Woodford Equity Income fund has been cast into doubt after the departure of three executives from the acquiring firm.
Link Administration Holdings, the parent company of Link Fund Solutions, released a statement to the Australian Stock Exchange overnight saying its preferred deadline for the deal with Waystone Group has been extended by a month after diligence and negotiations have taken longer than originally anticipated.
On Monday (March 27), Waystone Group said its chief executive officer, Derek Delaney, chief operating officer Paul Cahill and chief financial officer Glen Magee had all left the business.
The trio’s departure has raised questions over the future of the Link deal as their departure was due to a disagreement over the future strategy of the company, the Financial Times has reported.
In a statement Waystone said the departures were in “no way linked” to anything to do with regulation or financial matters.
“Given our growth and the current scale of the business it was felt that the right thing for the company was to introduce new management to take the business through the next stage of its journey,” the company said, adding that the board has already started the process to appoint successors.
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, as well £306mn in redress to the fund’s investors.
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.
Link Group and the FCA have previously said 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’.
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.
sally.hickey@ft.com
