Neil Woodford’s former fund, LF Equity Income (GB00BLRZQC88), is to offload around half of its remaining assets via the sale of selected healthcare holdings, but at a cut-price rate to the amounts previously reported.
Link Fund Solutions, the fund's authorised corporate director, has agreed to sell up to 19 of the fund’s healthcare holdings to Acacia Research Corporation for up to £223.9m. Investors in the fund, which is being wound up, will receive more of their money back. Link will give details on the dates that this will happen and the amounts by 29 July.
The sale, which could take up to six months to complete, would represent 50.4 per cent of the fund’s remaining value, based on its size on 3 June. But the amount agreed falls short of some expectations, as it had been reported that the deal was worth up to $300m (£278.5m).
It had also been reported in November last year that a consortium led by WG Partners had been looking to buy 15 healthcare positions for £500m. However, uncertainty due to the Covid-19 outbreak and a need to shift assets are likely to have dealt a blow to asking prices, and that deal fell through.
“This highlights the very real problem of being a forced seller, with all potential purchasers knowing that [illiquid assets specialist] Park Hill and Link were in no position to try to push the price higher,” said Ryan Hughes, head of active portfolios at broker AJ Bell.
The healthcare companies that LF Equity Income is selling are listed, unlisted and highly illiquid listed securities. Link added that in addition to these assets, the fund holds some other listed stocks.
Link also said in its update that the fund’s total assets, including those that will be sold, had a value of £444.2m on 3 June. This is a steep fall from the £558.4m they were estimated to be worth by research company Morningstar on 20 May.
