Fallen star fund manager Woodford courts investors in comeback bid | Business News



Neil Woodford, the former star fund manager whose empire imploded spectacularly last year, is canvassing interest from British investors about a potential bid to snap up some of his old investments.

Sky News has learnt that Mr Woodford and a number of colleagues from Woodford Investment Management (WIM) have held talks with institutional and wealth managers in recent weeks about assembling a new venture for sophisticated investors.

The principal idea pitched to prospective investors was the creation of a vehicle to buy back some of the unquoted WIM stakes in companies such as BenevolentAI, a drug discovery start-up, proton beam therapy specialist Rutherford Health and Immunocore, a biotech company which aims to treat serious diseases.

Sources said that Mr Woodford was mulling putting together an offer for the stakes held in the Woodford Equity Income Fund (WEIF) – which could cost in the region of £500m – at a discount to their net asset value.

Mr Woodford has also floated the possibility of creating a new fund to manage dozens of new holdings in London-listed companies.

Several sources said he had separately indicated a willingness to explore the idea of taking private one of the companies with which he had had a long association, such as the litigation funder Burford Capital.

A person close to Mr Woodford said this weekend that the prospect of the last of those ideas bearing fruit was “extremely remote”.

An ally of arguably Britain’s best-known stock-picker said that his discussions in recent weeks had been prompted by “inbound interest” in canvassing his views and possible involvement in a new vehicle.

The prospect of a return to active fund management for Mr Woodford comes amid turmoil for asset managers around the world, with stock markets plunging in the last fortnight as investors have taken fright at the implications of the global coronavirus outbreak.

It was unclear this weekend what the prospects were for Mr Woodford to resurrect his career by attracting new backers.

A source close to him insisted that while he had been meeting prospective backers, any fund that he established would be focused on professional, rather than retail, investors.

Mr Woodford’s firm had been in talks with advisers about finding buyers for the unquoted stakes even before his firm ran into difficulties last year.

At his zenith, Mr Woodford managed funds with more than £15bn of investors’ money, much of it entrusted to him by hundreds of thousands of ordinary savers.

He made his name during a stellar period at Invesco, the Henley-on-Thames-based fund manager, where he attracted a cult-like following.

However, a string of poorly timed bets on public companies such as the construction group Kier, haulier Eddie Stobart Logistics, and Capita, the outsourcer, combined with large sums tied up in illiquid private companies to plunge Mr Woodford’s firm into crisis.

The catalyst for his implosion was a decision last June by Kent County Council to withdraw a £263m investment mandate from WIM.

Mr Woodford immediately ‘gated’ his £3.7bn WEIF, preventing investors from selling their holdings and sparking one of the City’s bitterest rows for many years.

During the remainder of last year, Mr Woodford was stripped of his responsibility for running the funds which carried his name by Link Financial, their administrator.

The various WIM funds have since either been placed into run-off or handed to big City institutions such as Aberdeen Standard Investments and Schroders.

Blackrock, the world’s biggest asset manager, was handed the quoted part of the WEIF portfolio to sell, which includes shareholdings in companies such as Purplebricks, the online estate agent.

Investors now face losing as much as half their money as the funds’ holdings are liquidated by their new managers – although the scale of the losses will in some cases be lower.

In December, Bloomberg News reported that Mr Woodford and Craig Newman, WIM’s chief executive, were in China for talks about an unspecified new venture.

The meetings with Chinese investors are not thought to have progressed significantly, possibly as a consequence of the coronavirus crisis which gripped the company earlier this year.

However, the news that Mr Woodford is now holding talks with UK-based financiers will inevitably draw intense scrutiny.

It emerged in January that Mr Woodford and Mr Newman had reaped £13.8m in dividends during the financial year prior to WEIF’s suspension, deepening the outcry over the firm’s implosion.

“The accounts relate to the financial year before the Equity Income fund was suspended,” a WIM spokesman said at the time.

“We can confirm that the partners did not take any profits or income during the fund’s suspension, nor was any management fee earned from managing Woodford Patient Capital Trust.”

During his funds’ suspension last year, WIM continued to charge customers management fees.

WIM’s demise was the fund management sector’s most dramatic since New Star collapsed during the financial crisis, and sparked fury among savers and politicians.

Mr Woodford is now facing intense scrutiny from regulators and lawyers who believe there may be scope to take action against him.

The approaches to him about the WEIF holdings became particularly pronounced following the conclusion of an exclusivity period within which WG Partners, a merchant bank specialising in life sciences, had the opportunity to conclude a deal, according to the person close to Mr Woodford.

WG remains interested in striking an agreement.

Other holdings in the unquoted portfolio, which are being sold by the investment bank PJT Park Hill, include AMO and Oxford Nanopore, two other healthcare companies.

The stakes are now expected to be sold individually- unless Mr Woodford or another investor can agree a larger deal.

Speaking late last year, Mr Woodford said: “I personally deeply regret the impact events have had on individuals who placed their faith in Woodford Investment Management and invested in our funds.”

Mr Woodford declined to comment on Saturday.



Sky News

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