Sale adds to losses for Woodford investors
INVESTORS trapped in Neil Woodford’s Equity Income fund are nursing a hefty loss after administrators sold its small and private healthcare stocks at a significant discount.
Days after the first anniversary of the fund’s suspension, administrator Link said it had offloaded its health holdings to US investor Acacia Research Corporation for £224m. Law firm Nelsons announced yesterday that it was considering action against the administrator for its part in the scandal, which trapped hundreds of thousands of savers’ money in high-risk and hard-tosell stocks following a string of catastrophic bets by the one-time star fund manager. The sale to Acacia means the fund now has £224m of cash which it can distribute to investors.
As of June 3, the portfolio was only worth £444m, including the £224m of cash, compared with £558m before the sale. This shows the healthcare stocks were sold at a substantial discount and the remaining investments have also fallen in value. Investors’ remaining savings are 20pc lower as a result.
Link said it could not give a date for when the money would be returned to investors. It said the sale of the stocks to Acacia could take up to six months.
The administrator did not provide details on what would happen with the remaining £220m still invested in privately held firms. Investment companies Blackrock and Park Hill have been advising Link.
Link said: “This agreement with Acacia will enable us to distribute money to investors in due course.”
A total of £2.3bn has been returned since the decision to close the fund and sack Mr Woodford in October last year. The manager had invested too much in difficult-to-sell small and private companies, leaving funds inaccessible.
Nelsons said it would target Link over its failure to intervene earlier than June 2019. Link was tasked with making sure that the fund was being run safely and in line with the rules, and – apart from Mr Woodford – was the only player involved able to see the rise in risky bets, lawyers have claimed.