By David Ricketts and Justin Cash

Of Financial News


The administrator overseeing Neil Woodford's former Equity Income fund has said there are just 124 million pounds ($172.4 million) of assets left to be sold, but indicated it could be next year before cash is returned to investors.

In an update to investors on Monday, Link Fund Solutions said nine companies are left to be offloaded in the former bestselling fund, including holdings in Atom Bank PLC, Benevolent AI and Rutherford Healthcare.

Link also has to offload a stake in Mafic, a U.S.-based unlisted company specializing in the production of basalt fiber which it bought in February. Link said at the time that the investment was necessary to protect the value of assets in the fund.

Other assets remaining to be sold include Ibiza-based luxury property complex Sabina Estates, battery-technology developer Nexeon, and life-sciences investment company Cambridge Innovation Capital.

"We continue to make progress regarding the sale of the remaining assets, and whilst it isn't possible to provide a definitive end date to the realization process, it is hoped that the sale of the remaining assets will be concluded in 2022," Link told investors in its update.

"This means that we are unable at this time to provide a specific date by which the fund's wind up will be complete and all cash returned to investors," it said.

More than 300,000 retail investors were trapped in the collapsed fund. They have received a total of GBP2.54 billion in payments from Link since January last year.

Woodford's Equity Income fund, which at its peak in May 2017 managed GBP10.2 billion in assets, shrunk to GBP3.7 billion in June 2019 following a run of poor performance and heavy investor withdrawals.

Winding up the fund, which collapsed in October 2019 following a four-month suspension, has netted millions of pounds in fees for some financial-service and legal firms.

BlackRock Inc., the U.S. asset manager, has been responsible for selling the liquid holdings in the Woodford fund, while PJT Park Hill has been tasked with offloading the harder-to-sell investments made in unquoted companies.

Last year's accounts showed BlackRock Advisors U.K. was paid GBP11 million to the year ending March 2020, while PJT received GBP3.2 million. Meanwhile, Debevoise & Plimpton, which provided specialist legal support to assist with the sale of unquoted assets, received GBP2.5 million.

The update from Link comes as exclusive figures obtained by Financial News show Kent County Council, the local authority whose request to pull its GBP240 million investment sparked the suspension of the Woodford fund, seems to have almost entirely skirted any legal expenses in dealing with the fallout.

A Freedom of Information request by FN shows that Kent County Council instructed law firm Squire Patton Boggs to advise its Superannuation Committee and its members and officers on investments made with Woodford Investment Management and on "other matters."

The council was unable to provide a more detailed response on the legal spend, but records provided show that Kent County Council didn't pay any fees to Squire Patton Boggs between June 2019, when trading in Woodford's largest fund was suspended, and December 2020, when the firm billed just GBP806 for "strategic and corporate services."

Incurring just GBP806 in legal expenses will be seen as a win for the council. Having criticized those involved in the Woodford fund over claims they failed to inform it in advance that it would be frozen, the bill for the legal work required would have amounted to only around an hour of top-level partner time at a leading City firm.

After the GBP806 in fees in December 2020, Squire Patton Boggs didn't bill again up until May 2021, the latest date figures were available at the time of publication, nor at any time since April 2017, when the records are available from.

The Freedom of Information Act request shows that the council's internal legal team did spend around 50 hours over the past two years on activities exclusively linked to Woodford Investment Management, including attending meetings, research, advice to officers, and responding to audit activities. However, the team doesn't record hours against specific cases, so the figures are only approximate.

The council confirmed that it hadn't used any other third parties in relation to its dealings with Woodford.

More widely, the Woodford saga continues to drag on. In May, the U.K.'s Financial Conduct Authority said its two-year long investigation into the collapse of Woodford's fund was still ongoing.

In a letter updating members of the parliament's Treasury Select Committee, FCA Chief Executive Nikhil Rathi said the regulator's investigation team has conducted 14 witness interviews and has gathered in excess of 20,000 "items of relevant material" from key individuals.

Mr. Rathi told members of parliament that the FCA is "confident the investigation work will be completed by the end of this year."




(END) Dow Jones Newswires

August 02, 2021 09:14 ET (13:14 GMT)

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