Woodford's embattled investors endure another blow as £550M deal to sell-off biotech holdings falters
Neil Woodford’s flagship fund is in the process of liquidation — and offloading the now shunned veteran stock picker’s non-liquid holdings is proving a brutal task.
Investors in the fund have reportedly suffered yet another setback after a £550 million deal to rescue a portfolio of his non-liquid stakes in biotech startups collapsed, which could culminate in a fire sale of the holdings.
The implosion of Woodford’s fund and his reputation as one of the UK’s shrewdest stock pickers occurred last year, following a protracted period of withdrawals and a subsequent suspension that left swathes of investor cash trapped.
After 26 years at Invesco, Woodford launched his cornerstone equity income fund in 2014, raising billions to invest in the life sciences. But some of his bets — such as Prothena, Circassia and Northwest Bio turned sour, and those wrinkles culminated in a long period of weak returns. Woodford originally anchored his reputation as a blue-chip investor in companies like GSK, but rattled by Gilead’s HIV prowess, he elected to part ways with the British drugmaker in 2017 in a lengthy blog post entitled “Glaxit.”
In March, the veteran was chiding his critics for steering investors away and sullying his reputation, in an attempt to stifle the bloodletting in his Woodford Equity Income Fund. In an interview with the Financial Times, Woodford said the rate of withdrawals from the fund put him at risk of being “out of business in about two-and-a-half years.”
As the trust in Woodford’s bets waned (the size of the fund shrank from £10.2 billion to £3.7 billion in two years), he attempted to shackle his investors by suspending their ability to redeem any liquidity from the fund. Adding fuel to the fire, Woodford refused to waive his £100,000-a-day investment management fee for the cornerstone fund, despite outrage from the UK’s Financial Conduct Authority, and the chair of the Treasury select committee.
The saga lingered on when in July Link Fund Solutions (the official holder of the Woodford Equity Income Fund) said investors would be thwarted from redemptions, sales or other transactions for an additional 28 days. In the first days of suspension, Woodford’s team sold at least £300 million in assets in an attempt to shift away from private companies toward more liquid stocks. By October, the disgraced Woodford was fired and it was decided that his flagship Equity Income Fund would be wound up. “This was Link’s decision and one I cannot accept, nor believe is in the long-term interests [of investors],” he told Reuters.
Late last month, Equity Income investors received their first payout, worth between 48 pence and 58 pence for a pound, following the sale of the listed portion of the portfolio by BlackRock. Now, as the liquidation process drags on — getting rid of the fund’s non-liquid funds — roughly 26% of the holdings — is proving harder than anticipated.
A deal with a boutique life sciences-focused investment bank WG Partners to assemble a group of investors to purchase that biotech portfolio (which includes stakes in biotech companies such as Oxford Nanopore and Immunocore) has fallen apart.
A spokesperson for Link suggested that it was not in the best interest of investors to provide a running commentary of the sales process.
“It is in the best interests of all investors for the Fund to be wound up on the basis of an ‘orderly realization’ of the Fund’s assets, which involves the sale of the Fund’s assets over a reasonable period of time.”
Endpoints News has also contacted WG Partners for comment.