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Woodford investors set to share £97m in fourth round of payments

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30/11/2020
Investors trapped in former star manager Neil Woodford’s Equity Income fund will receive their fourth payment from the wind-up process within a fortnight.

In a letter to investors, the fund’s administrators Link Fund Solutions confirmed it expects to complete the transfer of remaining assets forming part of the portfolio sold to Acacia on or around 11 December and no later than 31 December 2020.

It did anticipate this to conclude by 30 November, but said it expects to make a fourth capital distribution to investors of up to £97m.

The update stated: “As a result of transfers to Acacia and the sale of other assets by the fund since the third capital distribution was paid to investors on 26 August 2020, the fund has £27.82m of cash available (as at 27 November 2020) for distribution to investors.

“However, the amount that will be distributed will increase if we complete some or all of the remaining transfers to Acacia in the next few days, as expected, or if there are further sales of assets not forming part of the Acacia portfolio transaction. We therefore anticipate making a fourth capital distribution to investors of up to £97.62m.”

Investors of the LF Equity Income fund (formerly LF Woodford Equity Income fund) will receive a further letter on or around 9 December 2020 confirming the total to be distributed and the amount they will receive from this fourth capital distribution.

The amounts will be calculated on 3 December 2020 and are expected to be paid around 11 December 2020.

However, for those who invested in the fund via a platform, they may receive the payments later due to the time it takes for the platform provider to process the payment.

A total of £2.54bn will have been returned to investors since the fund was wound up.

‘Not much of a Christmas present’

Ryan Hughes, head of active portfolios at AJ Bell, said: “News of the next tranche of payment from the winding up of the Woodford fund by Link will be cautiously welcomed by investors with a further £97m likely to be paid on 11 December but won’t represent much of a Christmas present given the scale of overall losses on the fund for many investors.

“This payment stems from the previously announced sale of assets to Acacia along with additional sales that have been made in recent months. This fourth payment represents around a third of the remaining value in the fund with Link indicating that a further payment could be made early next year. However, this won’t be the end of the matter with further assets still to be sold and indications that this process is unlikely to be completed until mid to late 2021, meaning that it is likely the winding up process will have taken approaching two years.”

Background to the Woodford saga

The Woodford Equity Income fund was suspended in June 2019 following an increase in redemption requests which couldn’t be readily met. In October 2019, Link confirmed the £3bn fund would be wound-up with cash returned to investors as soon as possible.

BlackRock was appointed to sell the liquid part of the assets while PJT Park Hill were tasked to sell the illiquid part of the portfolio.

In January, trapped investors received the first tranche of payments from the sale of assets. They received a second payment in March and a third in August.

Neil Woodford, once considered Britain’s best stock picker, was sacked as manager of the fund and Woodford Investment Management was closed down.

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