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Woodford's frozen £3.7bn fund could be unlocked on Monday

·Senior City Correspondent, Yahoo Finance UK
Fund manager Neil Woodford. Photo: YouTube/Woodford Investment Management
Fund manager Neil Woodford. Photo: YouTube/Woodford Investment Management

High-profile money manager Neil Woodford’s stricken investment fund could be unlocked on Monday, potentially giving investors access to £3.7bn of frozen capital.

The Woodford Equity Income fund was frozen at the start of June over concerns about liquidity. The suspension is reviewed every 28 days and Link Asset Services, the administrator of the fund, will make a decision on whether to unfreeze it on Monday.

“Link Fund Solutions considers that it has at all times acted in accordance with applicable rules and in the best interests of all investors of the Fund and it will continue to do so,” a spokesperson for Link said.

Woodford Equity Income fund was frozen on June 3 after Kent County Council tried to withdraw £260 million. The fund had built up large positions in illiquid private stock and did not have the cash on hand or enough liquid assets to meet the redemption.

READ MORE: Shake-up at money manager Neil Woodford's business after fund freeze

The fund administrator took the decision to freeze the fund to protect investors from a “fire sale” of assets that would have been needed to meet the redemption. The fact Woodford needed cash quickly would have likely led to lower prices from sales, meaning the overall fund value would fall and hit all investors.

Link will asses the fund’s liquidity position when making a judgement on unfreezing the fund. An announcement is expected on Monday morning.

“We continue to work with Link to ensure the fund can reopen as soon as is in the interests of all investors,” a spokesperson for Woodford said on Friday.

During the suspension Woodford has been selling stakes in both its listed and unlisted investments in a bid to free up cash.

The Woodford Equity Income fund recently offloaded a £125m stake in BCA Marketplace, the owner of We Buy Any Car, and Sky reported this week that Woodford is close to hiring a bank to help it sell stakes in private businesses like Atom Bank.

READ MORE: Funds like Woodford 'built on a lie' and 'fundamental questions' ignored

A spokesperson for Woodford said the fund is “exploring a range of options as we seek to reposition the fund and in order to protect investors” and insisted “Woodford is not a distressed seller.”

“We recognise the concerns of all investors and are actively engaged with the fund’s ACD [authorised corporate director, Link] and focused on getting the portfolio in a position to resolve this situation,” the spokesperson said.

Neil Woodford is one of the most high-profile money managers in Britain and was seen as one of the most successful. He rose to prominence during a 25 year career at Invesco Perpetual before striking out under his own name in 2014.

The Financial Conduct Authority has launched an investigation into the suspension of the Woodford Equity Income fund. FCA CEO Andrew Bailey this week publicly criticised Woodford for “sailing close to the wind” prior to the fund’s suspension.

READ MORE: Star fund manager Neil Woodford 'sailed close to the wind'

Bank of England governor Mark Carney also criticised open-ended funds like Woodford’s, saying they were “built on a lie” of daily liquidity.

A spokesperson for Link said it “will continue to co-operate fully with the FCA throughout this process and will answer any questions which the FCA has regarding the Fund.

“This is a confidential process and we cannot speculate or make any further comment regarding the FCA investigation.”

The FCA declined to comment.


Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.

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