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Woodford investors receive next round of payments today

Paloma Kubiak
Written By:
Paloma Kubiak

Investors trapped in the failed Woodford Equity Income fund are set to receive their fifth capital distribution payment today.

Link Fund Solutions – the fund’s administrator – confirmed that the fifth payment from winding up the LF Equity Income fund will be made today (Friday 11 November).

In total, £20m will be distributed in this latest round, with investors seeing £2.54bn returned since the flagship fund’s suspension and wind down plan three years ago.

The table below reveals the payment details to date:

According to Ryan Hughes, head of investment partnerships at AJ Bell, the latest round of payments is much smaller than the previous amounts.

Based on the fifth distribution, AJ Bell calculates investors will now have received 57.5526 pence per share since suspension.

Compared to the price on suspension (83.08p) it means investors have seen 69% returned to them, meaning they are 31% down.

Link was not able to share exact numbers of how many investors will receive this payment, but according to investment platform Hargreaves Lansdown, at the time the fund collapsed, it had 291,520 direct and indirect (eg multimanager/fund of fund) clients with direct exposure worth £1.09bn.

However, during September’s Transparency Task Force campaign meeting on ‘Woodford: What’s next…and why Parliament must listen’, questions were raised about where all affected investors are as aside from big name Hargreaves, people may have been investing via other platforms and different vehicles, such as Self-invested Personal Pensions (SIPPs) in their own name. The actual figure could be tens, if not hundreds of thousands of investors more than the c. 300,000 highlighted

‘Long, drawn out process’

Hughes said: “Investors will be pleased to see news of a further distribution from the former Woodford Equity Income fund, as Link continues to try and wind up the fund.

“However, this of course leaves a further £60m of assets in a number of unlisted companies that still need to be sold. With market volatility high and the economic outlook challenging at best, given these companies have not been sold in the past three years, it is unlikely these final positions will be sold quickly, unless Link is prepared to accept a discount to the current valuation.”

He added: “Winding up the fund was always likely to be a challenge and it has certainly proven to be the case. With recent news of the FCA looking at fining Link for its failure to manage liquidity effectively, it feels like events are moving forward a little quicker than before. Investors will be glad to see this after such a long, drawn out process, although it seems there are still plenty more twists and turns in this sorry saga.”

The table below gives details of the capital distribution rates:

How did Woodford investors get to this point?

Three years ago, the flagship Woodford Equity Income fund, run by former star manager Neil Woodford, was suspended as it couldn’t meet a surge in redemption requests following a period of poor performance.

The suspension of the £3bn fund was originally due to be lifted and the fund re-opened in December 2019. But in October 2019, the fund’s administrators confirmed the fund would be wound up with cash returned to customers “as soon as possible”.

Payments from the sale of assets from the renamed LF Equity Income fund started in January 2020 and as of today, five payments have been made. Approximately £60m is left to be sold and returned to investors.

Meanwhile, the Financial Conduct Authority (FCA) announced Link Fund Solutions could be hit with a £306m penalty (redress to investors) over its “failings in managing the liquidity” of the fund.

However, three law firms (Leigh Day, Harcus Parker and RGL Group) have filed group action claims against LFS, and Hargreaves Lansdown over its involvement too.

The first application is expected to be heard in the High Court in December 2022.

In the meantime, investors have one of three options when it comes to complaining and seeking redress.