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Sale of Link Fund Solutions completes: Key step to unlock Woodford redress

Sale of Link Fund Solutions completes: Key step to unlock Woodford redress
Paloma Kubiak
Written By:
Paloma Kubiak

Failed Woodford investors are one step closer to a £230m redress scheme after Waystone Group completed the “major milestone” acquisition of Link Fund Solutions.

Asset management service firm Waystone Group has completed the transaction to acquire the Irish and UK businesses of Link Fund Solutions (LFS), part of Link Group.

This latest acquisition means Waystone supports asset managers with more than $2trn in AUM.

However, for trapped Woodford investors, the completion – which has achieved regulatory and other contractual conditions – is a key step and means they’re one step closer to the proposed settlement scheme.

The settlement consists of a fund of up to £230m which includes a voluntary contribution of up to £60m from Link Fund Solutions Limited (LFSL) ultimate parent Link Administration Holdings Limited. It will also voluntarily contribute up to £2.5m towards the costs of implementing the redress scheme, if it gets the go ahead.

However, the scheme was conditional on the sale of Link Group’s Fund Solutions business to asset management service firm Waystone Group.

Now that this part has been achieved, the other steps will need to be fulfilled.

High Court approval and scheme creditor vote

First is the High Court hearing tomorrow which is where LFSL ask the court for permission to call a meeting of scheme creditors to consider and vote on the scheme.

If permission is granted, for the proposed scheme to go ahead, it requires approval from a majority of scheme creditors – 50% of creditors representing 75% or more in value, during a vote expected to take place on 4 December 2023. Details of how to attend and vote at the meeting and vote without attending the meeting will be provided in due course.

If the required majority of creditors vote in favour of the scheme, the court will then consider in late December whether to approve the scheme. If approved, Link expects it will become effective “on or about 18 December 2023”.

As such, investors could see a first distribution from the settlement fund of between £180m and £200m in Q1 2024 if all these steps are taken. “Additional payments are also expected to be made as soon as possible”, Link added in its last update in September.

If approved it will be legally binding and means “in return for the payments made from the settlement fund, scheme creditors will no longer be able to make any claim against LFSL, the parent and other related parties relating to the WEIF” (Woodford Equity Income Fund).

If the settlement fund is distributed in full, it is estimated that investors will receive about 80% of the net asset value of the WEIF at the point of suspension – £2.56bn has already been distributed from the £3.6bn value of the fund.

If the scheme doesn’t go ahead, Link suggested the likely outcome is “many years of litigation”, and if it successfully challenges claims, it may not be required to pay anything to investors.

For now, investors don’t need to take any action and Link said those investors would not be approached by or on behalf of LFSL to make a claim in the scheme.

‘Major step forward’

AJ Bell head of investment partnerships, Ryan Hughes, said: “Investors waiting for redress from the long-running Woodford debacle will be pleased to see that a major step forward for the settlement scheme has now been achieved.

“The proposed settlement scheme as set out to investors back in the summer was conditional on the successful sale of Link Fund Solutions to Waystone Group. This sale has now been completed with regulatory approval received which clear a major hurdle in investors receiving redress payments, the first of which should be due in Q1 2024.

“Tomorrow (10 October) sees the next step take place with the Court hearing to allow a meeting to be held for investors to vote on the proposed settlement scheme. Slowly but surely, the very patient investors trapped in the former Woodford Equity Income fund are inching towards some form of closure.”