By Daniel Lanyon on 1st March 2019
The fund manager has suffered a very testing period of performance over the past few years.
Following pressure from investors, fund manager Neil Woodford has moved across holdings in a number of unquoted investments including p2p lender Ratesetter and digital bank Atom from his flagship fund to the investment trust he manages in an apparent bid to battle liquidity issues.
Alongside the two financial disruptors Woodford also moved, from the open-ended £4.8bn Woodford Equity Income to the £932m closed ended Woodford Patient Capital Trust, Carrick Therapeutics and Cell Medica holdings.
The trust acquired this portfolio of assets for £78.9m, made up of £6m of cash and the rest made of new shares issued at par.
The valuation of the assets was independently verified by Duff & Phelps, although no details have been given. he additional investment will increase the exposure to Atom Bank from 3.67 per cent of the Woodford Patient Capital Trust’s portfolio pre-acquisition to 6.76% post-acquisition and RateSetter from 0.44 per cent to 1.82 per cent.
A spokesman for Woodford said: "This step signals the start of a strategy to switch the fund’s unquoted exposure from individual unquoted holdings to shares in the trust. Neil is as passionate on the unquoted asset class as ever but having listened to feedback from clients we believe that moving the exposure to the asset class via a collective fund rather than individual unquoted stocks makes sense – both operationally and from an investor view".
Analysts at Numis says it is unusual to see assets transferred from an open-ended fund to a closed-ended fund managed by the same manager.
“We expect a significant part of the rationale for the transaction is the need to reduce exposure to unquoteds within the open-ended fund. We estimate that Woodford Equity Income had c.20 per cent of its portfolio in unquoted investments at 31 January, which has grown significantly from c.10 per cent in December 2017, largely because of redemptions that has seen the size of the fund shrink to £4.8bn from a peak of over £10bn. Highlighting some of the issues associated with investing in illiquid assets within an open-ended funds,” Numis said.