Investors in Neil Woodford's former flagship fund are getting their first payout since the disgraced stock picker locked the fund in June.
Payments as high as about 59 pence a share will be made to clients, administrator Link Fund Solutions Ltd. said Tuesday in a letter. Liquidation of the LF Equity Income Fund began in mid-January.
The payouts begin to lock in investors' losses in a fund whose assets had plunged to about £2.9 billion ($3.8 billion) on Jan. 27, according to data compiled by Bloomberg. That's down from £3.8 billion at the end of May, just before redemptions were suspended. In one share class, the initial payment of 57.9 pence a share compares with a current net asset value of 78.1 pence, reflecting the gap that remains to be recovered.
"This payment represents just over 70% of the current fund value, and has been raised from the sale of the liquid element of the portfolio," Ryan Hughes, head of active portfolios at AJ Bell, said in an emailed statement. "Investors will be acutely aware that a large portion of their investment remains trapped in the illiquid, unquoted holdings."
Mr. Woodford's downfall was one of the biggest U.K. finance stories of 2019. It began when he suspended his main fund because he couldn't sell its holdings quickly enough to meet redemption requests. And it reached a crescendo in mid-October, when Link decided to remove Mr. Woodford as manager and put the fund into liquidation. Mr. Woodford responded by announcing the closure of his investment firm.
Since then, Mr. Woodford has faced criticism after it emerged that he shared in almost 14 million pounds in dividends months before his business collapsed. He also flew to China to test investor appetite for a potential comeback, holding exploratory meetings with investors interested in early-stage assets.
BlackRock Inc. was hired to sell the fund's holdings of publicly listed securities, while private equity specialist PJT Park Hill was responsible for finding buyers for the fund's hard-to-sell assets.
Link has told investors individually how much money they'll be receiving and to explain how the payment was calculated.
