Star fund manager Neil Woodford ups stake in Alternative Credit fund

By Daniel Lanyon on Friday 16 June 2017

Alternative Lending

Woodford's exposure to non-bank lending has increased following the latest fund raise for Honeycomb

Woodford's exposure to non-bank lending has increased following  the latest fund raise for Honeycomb. 

Neil Woodford has increased his stake in the £300m Honeycomb investment trust, buying news shares for his two open ended income funds,

The fund manager has brought new shares issued in the trust for its income-generating characteristics calling it a portfolio “with offers a very attractive yield”.

Honeycomb, which is managed by specialist alternative Credit boutique Pollen Street Cap, raised £106m last week – shortly after announcing that its manager was merging with MW Eaglewood.

Woodford bought the new shares to use in his two income-focused portfolios, the £10.2bn CF Woodford equity Income fund and the £700m CF Woodford Income Focus fund.

Other investors taking part included Woodford’s former colleague at Invesco Perpetual Mark Barnett as who is the investor with the largest holding in the trust.

The portfolio was launched in December 2015, raising £100m and has grown through secondary issuance of shares on several occasion including this latest one, which has heavily oversubscribed.

Honeycomb has a dividend target of 8 per cent per annum on its issuance price. This, however, will ramp up to 10 per cent or greater on the issue price from Q3 2016 - when the portfolio was substantially deployed. The last quarterly dividend of 24.5p represents an annualised yield of 8.8 per cent on the current share price and the shares are trading on a 12.1 per cent premium.

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