More than 300,000 investors trapped in Neil Woodford’s failed flagship investment fund will share £142m as part of a second payout, and have been warned they are unlikely to receive extra cash soon.
The payout, which is expected by 25 March, is a fraction of the £2.1bn pot that was distributed back in January. It represents 20% of the remaining assets of the Woodford Equity Income Fund (WEIF), worth about £575m.
At its peak, the WEIF was worth more than £10bn but suffered from several poorly performing investments in companies including estate agent Purplebricks, finance firm Burford and doorstep lender Provident Financial. Woodford’s string of bad bets sparked a surge in redemptions that eventually resulted in the fund’s suspension last June.
The fund’s administrators, Link Fund Solutions, said on Thursday that most of the fund’s easy-to-sell assets had been sold and further payouts were unlikely in the coming months.
Link said in a letter on Thursday: “At this stage, we are unable to advise you of the exact timing and amount of these future capital distributions as this is dependent upon the sale of the fund’s assets. Investors should be aware that the assets that remain to be sold are the less liquid assets of the fund and disposing of these assets may take longer than was the case for the sales to date.”
Investment banking firm PJT Park Hill, which is helping sell the remaining assets, last year estimated investors would lose nearly 33% of their remaining cash once the firm was wound up, and nearly 43% in a worst-case scenario.
Ryan Hughes, head of active portfolios at AJ Bell, said Park Hill may struggle to sell the remaining assets at full price, given the state of financial markets, which have been roiled by the coronavirus outbreak.
“We’ve seen market conditions deteriorate considerably, meaning that selling any unlisted and illiquid assets is likely to become much harder. Sadly, this means that it looks like investors are in for a long wait before they see the remainder of their money paid out of the fund,” Hughes said.
“While the asset manager will balance the competing needs to sell assets at a good price versus the saga dragging on for years, it seems inevitable that this will rumble on into 2021.”
