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Suspended Woodford fund paid £15m to sell assets and return cash to investors
30 September 2020, 17:14
The fund was suspended in June 2019 after too many people wanted to take money out.
A fund that used to be run by star City investor Neil Woodford has paid more than £15 million in fees to sell-off assets so it can reimburse its long-suffering shareholders.
More than a year after investors were blocked from withdrawing their money from the nearly £3 billion Woodford Equity Income Fund, around £288 million is still left.
The fund was suspended in June 2019 after too many people wanted to take cash out – its managers could simply not sell-off the rather illiquid assets that Mr Woodford had invested in fast enough at a good price.
Instead they stopped withdrawals and later decided to wind up the fund, slowly selling its investments. It has so far returned £2.45 billion to investors.
But the sales have come at a cost.
Figures released on Wednesday by Link, the Equity Income Fund’s administrator, showed that it had paid around £15.5 million to BlackRock, PJT Park Hill and Debevoise & Plimpton.
The companies have helped sell the investments, including some rather complex transactions.
Park Hill was paid £3.2 million to help secure a £223.9 million deal to sell-off the fund’s healthcare investments to Acacia Research Corporation.
“Investors have also learned that they have had to shell out c. £15.5m in fees to BlackRock, Park Hill and lawyer Debevoise & Plimpton to facilitate the selling down of the assets that will surely stick in the throat of all investors who have been waiting patiently to get some of their money back,” AJ Bell’s head of active portfolios Ryan Hughes said.
“While these fees would have been due regardless of who was selling the assets, seeing such sums will make for painful reading for investors.”
Investors were also told that it could take another 12 months to wrap up the fund, meaning that they may have to wait a long time to get the last of their cash back.
Adrian Lowcock, head of personal investing at Willis Owen, said: “The fact that investors could be trapped for another year, possibly longer, is shocking.
“It is little relief that investors have got the bulk of the proceeds back, as taking until the end of 2021 to wind up the fund will incur significant additional fees.”