Biotech unicorns first to go as Neil Woodford auctions assets off suspended fund — report
As Neil Woodford seeks much-needed cash to end what threatens to be a prolonged suspension of his flagship fund, his biotech holdings might be the first chunk on the chopping block.
Reuters is reporting that Woodford’s overseers at Link have brought in a boutique investment bank to handle the sale, which would follow a series of smaller auctions from the frozen Equity Income Fund that reaped £300 million ($379 million) in the first month after Woodford abruptly blocked investors from pulling out. But that was clearly not enough to reopen the flagship fund — Link announced on the same day, earlier this month, that the fund would stay closed for at least another 28 days.
And many more 28-day periods to come, it appears. The structured auction process could last up to three months, a source told Reuters.
The inability to meet redemptions — due to a high proportion of illiquid or unlisted assets that just worsened with an exodus of investors that shrunk the fund from £10.2 billion to £3.7 billion in two years — was a big reason behind the suspension. In order for Woodford’s turnaround mission to work, he must be able to rebalance his holdings with more liquid and listed stocks that can be sold off easily in the future.
Link had previously stated that it intends to appoint a partner to assist with the effort. The refreshed portfolio “will continue to be focused on undervalued companies, but the majority of them will be FTSE 100 and FTSE 250 index constituents,” it wrote in a statement.
According to sources, that partner will be PJT, a spinoff of Blackstone helmed by Morgan Stanley vet Paul Taubman. And they will likely be targeting buyers from hedge funds and secondary markets in the US and Europe.
Healthcare and biotech investments made up almost a quarter of the Woodford Equity Income Fund — though many of them have gone sour. Days ago, Saku Saha, a top Woodford lieutenant in charge of early-stage biotech bets, left the knackered company.
The main stakes being prepped for auction will be BenevolentAI and Oxford Nanopore, two unicorns focused on AI-aided drug discovery and DNA sequencing, Reuters noted. Existing investors, who have pre-emptive rights to a stock sale, include Lansdowne Partners, Odey Asset Management, Redmile for and Singapore’s GIC for Oxford Nanopore and Broad Street Principal Investments for BenevolentAI.
Since these are private companies with somewhat opaque valuations, the price Woodford manages to negotiate would be of essence.
In a video published earlier this month, where he explained the continued suspension to investors, Woodford acknowledges investor concerns about selling these stakes short.
“My view is that we won’t have to take big discounts,” he said. “These assets are fundamentally attractive, and I’m confident we’ll be able to execute the strategy and get very good value for our unquoted and illiquid portfolio.”