Neil Woodford's biotech investments to be sold for £224m

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Neil Woodford. (PA/Screenshot)

Investors in scandal-hit fund manager Neil Woodford’s flagship fund are set for a payout of over £200m ($250m) after administrators agreed to the sale of some of his investments.

Link Asset Services wrote to investors on Friday to inform them that they have agreed on a deal to sell Woodford Equity Income Fund’s healthcare investments to Acacia Research for £223.9m. The deal includes both publicly listed shares and stock in unlisted private companies. It could take up to six months to complete.

Shares included in the deal include Theravance Biopharma (TBPH), Oxford Nanopore and Mereo Biopharma (MREO) according to Sky News, which first reported the sale.

The sale is the latest step in the resolution of the Woodford saga, which was one of the most high-profile stories in business last year.

Read more: New fund rules could see investors take 'haircut' after Woodford crisis

Well-known investment manager Neil Woodford was forced to suspend withdrawals from his flagship £3.7bn Equity Income Fund fund in July 2019, after a flood of withdrawals left him unable to sell assets fast enough to meet the redemptions. The incident triggered a series of events that ultimately led to the collapse of Woodford’s entire business.

The collapse of Woodford Investment Management has led to calls for rules changes and an investigation.

It has also left tens of thousands of investors facing big losses on their investment. The value of the Equity Income Fund’s remaining investments funds combined with the total already distributed by administrators stands at £2.6bn — £1.1bn less than when Woodford suspended withdrawals last July.

Many investors would have already been facing losses when withdrawals were gated after a long period of underperformance by the fund.

Read more: Fallen stockpicker Neil Woodford closes business and quits funds

“There will no doubt be huge frustration at the valuation achieved by Park Hill, which has been managing this process, given the valuation may be lower than other offers that had reportedly been received and rejected previously,” said Ryan Hughes, head of active portfolios at investment platform AJ Bell.

“This highlights the very real problem of being a forced seller with all potential purchasers knowing that Park Hill and Link were in no position to try and push the price higher. At the end of the day with such illiquid stocks, these assets are only worth what someone is prepared to pay for them.”

Link, which is winding up the Equity Income Fund, still has to dispose of around £200m-worth of assets.