Woodford’s Once Iconic Fund Begins Forced Liquidations, Vows “No Big Discounts”

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British fund manager Neil Woodford – who has been faced with an avalanche of redemption requests – is kicking off asset sales by trying to offload his unlisted biotech investments, according to Reuters.

The process could take months, according to the source behind the scoop.

As we have reported in the past, Woodford has left thousands of investors without access to their savings after suspending its flagship $4.63 billion equity income fund about a month and a half ago after overwhelming redemption requests.

The biotech assets are set to be sold as part of a structured auction which could last up to three months. This means that investors looking to redeem could face another several quarters before they have access to their money. Boutique investment bank PJT has been hired to handle the sale but has yet to sign onto an official mandate. They are expected to start the process later this month and declined to comment for the story.

The sale is going to first address Woodford’s illiquid assets that will be bundled into multiple portfolios to be auctioned off. Woodford is also going to sell some of its listed, but illiquid assets, in addition to liquid investments on public exchanges which will also be packaged into different portfolios and auctioned off separately.

Investors including HarbourVest Partners and Coller Capital are expected to bid for parts of the portfolio, though both parties declined to comment. Existing investors in the fund’s top 10 holdings will have preemptive rights and will need to be approached first before trying to lure third parties into the deal. Hedge funds Lansdowne Partners, Odey Asset Management and Redmile own shares in names that Woodford owns.

There’s no official deadline to finalize the divestitures and some major holdings could still be sold individually.

The source said:

 “Price is the main thing here. It’s all about getting the best value.”

Meanwhile, Woodford himself said on July 1:

 “My view is that we won’t have to take big discounts”.

Healthcare and biotech were favorite sectors of Woodfords’ and made up nearly a quarter of the fund’s portfolio.

But “unicorn” companies like drug discovery company BenevolentAI and DNA sequencing technology firm Oxford Nanopore are difficult to value because they often have few orders and no revenue. Six Woodford biotech holdings produced losses last year. 

Valuing these firms was, and will continue to be, “quite an art form”, according to Nooman Haque, managing director, life sciences and healthcare, at Silicon Valley Bank.

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