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Woodford investors to get third round of payments in August

Emma Lunn
Written By:
Emma Lunn

Investors trapped in former star fund manager Neil Woodford’s Equity Income fund will receive their third payment from the collapsed fund next month.

In a letter to investors, the fund’s administrators Link Fund Solutions confirmed it “will soon be in a position to make a third capital distribution to investors from the winding up of the fund.”

As of 22 July, the fund holds £58m of cash available to be distributed to investors. However, this figure will be boosted over the next few weeks when further sales transactions complete.

The letter confirmed that the administrators had reached an agreement with Acacia Research Corporation for the sale of an agreed selection of up to 19 of the fund’s healthcare assets in return for up to £223.9m.

Under the transaction with Acacia the portfolio of assets will individually transfer at different times over a period of up to six months. However, as the transaction is for the sale of a portfolio of the fund’s shareholdings, rather than a series of sales of individual assets, the transaction will be judged as a whole.

A single distribution

Together with amounts received by the fund for the sale of other assets, this means Link will shortly be able to make a third payment. Link said the payments will be made via one single distribution to investors with available cash as opposed to “a series of smaller distributions”.

Link will write to investors again on or around 19 August 2020, detailing the total amount that will be available for this third capital distribution.

Investors will then receive another letter on or around 21 August 2020 which will provide details of how much they will receive as a share of the total capital distribution and confirmation of the date on which the payment will be made.

Ryan Hughes, head of active portfolios at AJ Bell, said: “The latest update from Link on the Woodford saga will test the patience of investors with the indication that it is going to take some while longer to fully wind up the fund.

“While a third distribution will hopefully be forthcoming towards the end of August following the sale of some of the healthcare assets to Acacia, it looks as around £200m of assets remain to be sold and Link have indicated that selling this highly illiquid rump may take longer than it has taken to get this far. As it has been seven months from the start of the wind up process, it is feasible that this saga could drag on well into next year.

“Given how illiquid the remaining holding are, Link has announced it will move from weekly to monthly valuations while we may get further insight into the sale process and costs when the report and accounts for the year ending March 2020 are finally released over the next month.”

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.

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