Finance

Investors in collapsed Woodford fund face further wait as asset sale drags on

The administrator overseeing Neil Woodford’s former Equity Income fund has said there are just £124m of assets left to be sold, but indicated it could be next year before cash is returned to investors.

In an update to investors on 2 August, Link Fund Solutions said nine companies are left to be offloaded in the former best-selling fund, including holdings in Atom Bank, Benevolent AI and Rutherford Healthcare.

Link also has to offload a stake in Mafic, a US-based unlisted company specialising in the production of basalt fibre which it bought in February. Link said at the time that the investment was necessary to protect the value of assets in the fund.

Other assets remaining to be sold include Ibiza-based luxury property complex Sabina Estates, battery technology developer Nexeon, and life sciences investment company Cambridge Innovation Capital.

READ Woodford probe won’t be complete until year end, says FCA

“We continue to make progress regarding the sale of the remaining assets, and whilst it is not possible to provide a definitive end date to the realisation process, it is hoped that the sale of the remaining assets will be concluded in 2022,” Link told investors in its update.

“This means that we are unable at this time to provide a specific date by which the Fund’s wind up will be complete and all cash returned to investors.”

More than 300,000 retail investors were trapped in the collapsed fund. They have received a total of £2.54bn in payments from Link since January last year.

Woodford’s Equity Income fund, which at its peak in May 2017 managed £10.2bn in assets, shrunk to £3.7bn in June 2019 following a run of poor performance and heavy investor withdrawals.

Winding up the fund, which collapsed in October 2019 following a four month suspension, has netted millions of pounds in fees for some financial service and legal firms.

BlackRock, the US asset manager, has been responsible for selling the liquid holdings in the Woodford fund, while PJT Park Hill has been tasked with offloading the harder-to-sell investments made in unquoted companies.

Last year’s accounts showed BlackRock Advisors UK was paid £11m to the year ending March 2020, while PJT received £3.2m. Meanwhile, Debevoise & Plimpton, which provided specialist legal support to assist with the sale of unquoted assets, received £2.5m.

The update from Link comes as exclusive figures obtained by Financial News show Kent County Council, the local authority whose request to pull its £240m investment sparked the suspension of the Woodford fund, seems to have almost entirely skirted any legal expenses in dealing with the fallout.

A Freedom of Information request by FN shows that Kent County Council instructed law firm Squire Patton Boggs to advise its Superannuation Committee and its members and officers on investments made with Woodford Investment Management and on “other matters”.

The council was unable to provide a more detailed response on the legal spend, but records provided show that Kent County Council did not pay any fees to Squire Patton Boggs between June 2019, when trading in Woodford largest fund was suspended, and December 2020, when the firm billed just £806 for “strategic and corporate services”.

Incurring just £806 in legal expenses will be seen as a win for the Council. Having criticised those involved in the Woodford fund over claims they failed to inform it in advance that it would be frozen, the bill for the legal work required would have amount to only around an hour of top level partner time at a leading City firm.

READ Woodford and Newman collected £1.5m in dividends weeks before fund suspension

After the £806 in fees in December 2020, Squire Patton Boggs did not bill again up until May 2021, the latest date figures were available at the time of publication, nor at any time since April 2017, when the records are available from.

The Freedom of Information Act request shows that the council’s internal legal team did spend around 50 hours over the past two years on activities exclusively linked to Woodford Investment Management, including attending meetings, research, advice to officers, and responding to audit activities. However, the team does not record hours against specific cases, so the figures are only approximate.

The council confirmed that it had not used any other third parties in relation to its dealings with Woodford.

More widely, the Woodford saga continues to drag on. In May, the UK’s Financial Conduct Authority said its two-year long investigation into the collapse of Woodford’s fund was still ongoing.

In a letter updating members of the parliament’s Treasury Select Committee, FCA chief executive Nikhil Rathi said the regulator’s investigation team has conducted 14 witness interviews and has gathered in excess of 20,000 “items of relevant material” from key individuals.

Rathi told MPs the FCA is “confident the investigation work will be completed by the end of this year”.

To contact the authors of this story with feedback or news, email David Ricketts and Justin Cash

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