Interactive Investor

Trapped Woodford investors agree compensation deal

Investors vote overwhelmingly in favour of a £230 million settlement payment, reports Sam Benstead.

15th December 2023 11:21

Sam Benstead from interactive investor

Investors trapped in Woodford Equity Income have agreed a compensation payout, set to be up to £230 million shared between the roughly 300,000 long-suffering investors according to how many fund units they held.  

Link Fund Solutions, which is the administrator of the fund, announced that 93.7% of investors, representing 96.1% of the value of the fund, voted in favour of the deal. At least 75% of investors had to vote in favour of the settlement for it to pass.  

If the scheme is approved on 18 January 2024 by the courts, Link expects to make an initial payment of between £183.5 million and £200 million during the first quarter of 2024.

The payout is additional to the cash returned from the wind-up of the fund, which is still ongoing.

In return for that payment, affected investors will no longer be able to make any claim against Link Fund Solutions (and its parent company Link Group) and other related parties relating to the Woodford Equity Income fund (WEIF).

The compensation to be paid through the scheme is up to approximately 77% of the amount that the Financial Conduct Authority estimated Link should pay, which was set at £298 million following an investigation.

The agreement draws a line under the Woodford fiasco, which began when the £3.6 billion WEIF was suspended on 3 June 2019.

Link says that if the settlement fund is distributed in full, then it is estimated that investors will receive about 80% of the net asset value of the WEIF at the point of suspension.

This takes into account what has been paid to investors to date and the most recent quarterly valuation of the remaining assets of the WEIF to be sold. The last payment from selling assets was made in late 2022, totalling £20 million.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.