New payout for Woodford investors, but final cheque remains elusive
7th October 2022 13:27
by Sam Benstead from interactive investor
Link says that investors could be waiting until mid-2023 for their final cash distribution from the closed fund.
Investors trapped in Neil Woodford’s Equity Income fund are set to receive another cash distribution.
Link Fund Solutions, the fund’s administrator, is making a fifth payment, worth £20 million. It will write to investors in early November to confirm the exact amount.
Including the next payment, a total of £2.56 billion will have been distributed to investors since the commencement of the winding up of the fund in 2019, when the fund could not sell assets quick enough when investors rushed to withdraw their money.
As of 30 September 2022, there was £80 million worth of assets in the fund. It still owns Atom Bank, Benevolent AI, Freevolt (previously named Drayson), Mafic, Nexeon, Origin, RM2 and Rutherford. All are private companies and therefore difficult to sell apart from Benevolent AI, which listed on the Euronext exchange this year.
Since the previous publication of the fund’s net asset value (NAV) on 30 June 2022, the value of Benevolent AI, a biotech company with labs in Cambridge, has fallen from €8 per share to about €4 per share. This is equivalent to a fall of £31.2 million, or just over 25% of the fund’s NAV.
Link said: “As we explained in our letter of 15 June 2022, because the fund now holds relatively few assets, and because some of the shareholdings (such as Benevolent AI) have a relatively large weighting compared to others, a change to the value of such assets will lead to a disproportionately large percentage increase or decrease in the fund's NAV.”
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The final cheque for long-suffering investors could still be a year away. Links says that it is “unable to advise” on the exact timing of when future capital distributions will be made, but it could be as late as mid-2023.
It said: “We will continue to wind up the fund in a manner and at a pace which seeks to achieve the best outcome for investors. Investors are reminded that the assets that remain to be sold are the less liquid assets of the fund and it is expected that some of these assets may not be sold before mid-2023.”
The Financial Conduct Authority (FCA), the City’s watchdog, has said that it is “likely” to fine fund administration firm Link Fund Solutions up to £306 million for its role in the downfall of Neil Woodford’s Equity Income fund.
However, if this fine was paid by Link, it would not necessarily go into the hands of investors who were trapped in the fund and then saw the value of their holding decline due to asset write-downs and forced sales.
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