The manager of Neil Woodford’s collapsed investment fund said it plans to give £20m back to investors today but revealed its remaining tech holdings have been battered by a downturn in the market this year, slashing hopes of further payouts.
In a letter to investors, Link Fund Solutions (LFS) said it would begin paying back the cash to investors next month by way of a capital distribution.
“We will write to you again in early November to confirm the total amount to be distributed to investors,” LFS managing director Karl Midl wrote in the letter to investors.
The illiquid nature of the fund’s remaining holdings is likely to scupper more payouts to investor in the future, however.
The value of the fund has plunged £31.2m since the last update in June, with its major holding in Benevolent AI tumbling from eight euros per share to 3.91 per share.
The fund still has holdings in firms including Atom Bank, Benevolent AI, Freevolt, Mafic and Nexeon and sait it would likely not be able to wind up the fund until mid-2023.
Retail investors were left millions of pounds out of pocket after the fund was shuttered after pumping cash into speculative bets on unlisted firms.
Burnt investors have been campaigning against LFS in a bit to recoup some of their losses. Legal firm Harcus Parker filed a suit earlier this year on behalf of the investors against LFS, in a bid to reclaim at least £18m from the firm, which they believe their investments would have accrued since 2019 had the fund not collapsed.
The payout comes after Link was warned by the Financial Conduct Authority last month that it could face a bill of up to £306m over its failure to properly manage the liquidity of the Woodford Equity Income Trust before it was frozen.
Link said it would challenge the finding of the FCA however, saying it “does not agree with the FCA’s view.”