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Consortium in talks to buy portfolio of Woodford's hard-to-trade stocks

4 November 2019

Sky News reports WG Partners is poised to enter exclusive talks to acquire £500m portfolio of Woodford Equity Income's unquoted and hard-to-trade healthcare stocks.

A consortium of life sciences investors is poised to enter exclusive talks to buy a £500 million portfolio of Woodford Equity Income's unquoted and hard-to-trade healthcare stocks, according to Sky News.

The consortium, led by WG Partners, could enter a period of exclusivity within which to conclude a deal as early as today, with an agreement likely to take a number of weeks to conclude, Sky News reported.

It is not clear how much WG Partners is offering for the portfolio, though its initial bid is understood to have been around 20% below the level at which the Woodford Equity Income fund is valuing them.

The size of the bid and its success will be crucial in determining how much Woodford Equity Income investors receive in distributions once the wind-up process begins.

The first distribution, expected at the end of January, is likely to be the largest, featuring the proceeds of the sale of the fund's larger listed stocks by BlackRock.

The proceeds from the sale of unquoted and hard-to-trade stocks, which is being led by private equity specialist PJT Park Hill, are expected to be distributed after that date.

The portfolio WG Partners is eyeing features a number of the £3 billion fund's unquoted positions, such as Oxford Nanopore, Immunocore and Kymab.

Smaller listed stocks which would be hard to offload in the market are also included. Rutherford Health (RUTH.NXX), whose shares have traded only minimally since listing on the NEX Exchange in February, features in the portfolio, as does 4D Pharma (DDDD), Mereo Biopharma (MPHM), Arix Bioscience (ARIX) and Verseon (VERS).

But it excludes the fund's second-largest unquoted healthcare holding, Benevolent AI, whose value was halved in September in a funding round lead by Singaporean state fund Temasek.

The sale also carries implications for the Woodford Patient Capital (WPCT) investment trust given the large cross-over in its holdings with the equity income fund.

The trust's board said in June the sale prices achieved for Woodford Equity Income's unquoted holdings would not necessarily be factored into the valuation of its shared stakes if they were deemed to be 'forced' transactions.

BlackRock has so far raised around £166 million from the sale of larger listed stocks, after offloading stakes in Countryside Properties (CSPC), Provident Financial (PFG) and Burford Capital (BURF).

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