Link investor

Link says Woodford fund investors will receive another small distribution

Investors in the collapsed Woodford Equity Income fund will receive a small fifth distribution from Link Fund Solutions, although the value of the remaining assets has fallen again.

Link, who last month was 14 days to respond to a fine of £50 million from the UK financial watchdog and an order for pay £306m in compensation for investors about his role in the collapse of the Woodford fund, wrote a letter to fund investors saying a £20m capital distribution would soon be released.

He also revealed that the net asset value of the fund, which is now called LF Equity Income Fund, was just under £80m at September 30, down almost a third from £118.5m. pounds in mid-June.

A drop in the value of Benevolent AI, a drug discovery specialist that former fund manager Neil Woodford strongly backed in 2018, is the main reason for the drop in net asset value.

BenevolentAI, which is listed on the Euronext stock exchange, fell from €8 per share to €3.91 per share, Link noted, leading to a £31.2 million drop in the value of shares held in the fund.

“Because the fund now holds relatively few assets and some of the holdings (such as Benevolent AI) have a relatively large weighting compared to others, a change in the value of these assets will result in an increase or decrease disproportionate as a percentage of the fund’s net asset value,” Link said.

The fund’s other holdings are in Atom Bank, Freevolt (formerly Drayson), Mafic, Nexeon, Origin, RM2 (LSE:RN2) and Rutherford.

Since Link closed the £3.7bn fund in June 2019, capital distributions totaled £2.54bn before the current proposal, which would bring the total to £2.56bn .

Yesterday was the deadline set by the Financial Conduct Authority (FCA), when it issued a warning to Link, including 14 days to respond to the £50million fine and the proposed compensation.

Link Fund Solutions, a subsidiary of Australia’s Link Group, has received the draft warning notice from the UK financial watchdog following its investigation into the Woodford fund’s downfall.

The FCA said the compensation figure was based on its “current view of LFS’s failures to manage liquidity” of the Woodford fund and “does not reflect any amounts that may be due to anyone else, including members of the fund, as a result of potential wrongdoing by other parties”, which is possibly related to legal claims made against Link.

Link Fund Solutions said it was considering “all options” including settlement talks with the regulator, which could lead to a reduction in the fine, or contesting the warning, while parent company Link Group said said she “did not agree” with the FCA’s findings. and would not fund any fines or compensation from the larger group.

Talks between the Financial Conduct Authority and Link would continue.