Neil Woodford alternative finance and fintech holdings in limbo

By Daniel Lanyon on 16th October 2019

Fintech

The former star fund manager has been a big backer of disruptive firms but the closure of his investment management business.

Neil Woodford alternative finance and fintech holdings in limbo
Image source: Woodford IM

Neil Woodford, the UK’s best-known investor, is closing up his business after just five years following his loss of control of his flagship fund putting his portfolio of fintech and alternative finance holdings under the risk for a potential change of ownership. 

Link Fund Solutions, the Woodford Equity Income fund’s administrator said that it believes a managed winddown of the portfolio is in the best interest of investors. Yesterday it followed that Woodford would subsequently close his overall firm which manages the fund, alongside two other strategies, the Woodford Income Focus fund and the Woodford Patient Capital Trust. 

The latter contains a handful of private stakes in fintech and alternative finance firms including RateSetter, Atom Bank and Seedrs. 

In March, following pressure from investors, Woodford began moving across holdings in a number of unquoted investments including the above firms. 

On the face of it, this seemed like a good plan. The closed-ended fund does not give redemptions to investors and therefore Woodford would not be a forced seller. 

However, his firm can be sacked as the investment trust’s manager and, as he does not earn a management fee on the portfolio yet, the manager resigned the mandate. A new investment manager has yet to be announced and in theory, whoever it is could decide to sell holdings. 

Woodford also is a holder in Honeycomb, a leading alternative credit investment portfolio and also sold his holdings in two other lending funds: £49m in VPC Specialty Lending and a £94m stake in the P2P Global Investments trust (now Pollen Street Secured Lending) earlier this year.

Woodford also participated in Atom's most recent £50m fundraise. 

A spokeswoman for Atom said changes at Woodford Investment Management doesn't affect the bank or its "momentum."

"We’re on track to take £1bn of applications from small businesses and home buyers this financial year. Having closed a £50m raise last month the bank is very well capitalised. We have a broad and engaged shareholder base who are fully behind our investments in growth and technology," they said.

 Spokespersons for RateSetter declined to comment on Woodford IM's closure.

Woodford was also a holder of Draper Esprit, a fintech enthusiast venture capital fund, until selling his stake in November 2018.

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