Neil Woodford raises record £800m for new trust

Δημοσιεύθηκε: 20 Απριλίου 2015 - 16:42

UK equity manager Neil Woodford has raised a record £800m ahead of Tuesday's launch of his new investment trust focusing on early-stage companies.

Subscribers saw their applications scaled back by 10 per cent after demand exceeded even the £800m figure, which represented an increase from the original £500m maximum.

The Woodford Patient Capital Trust, aimed at investors prepared to commit their money for several years, will be large enough to enter the FTSE 250 index following its flotation on the London Stock Exchange.

"To raise more than £800m to invest in a previously overlooked asset class is a tremendous endorsement of the patient capital strategy," said Craig Newman, chief executive of Woodford Investment Management, the company set up by Mr Woodford last year.

Tuesday's launch will be the largest of any UK-based listed fund, beating a record set by Mercury European Privatisation, which raised £549m in 1994, but was wound up 10 years later.

Its size is testament to the pulling power of Mr Woodford, who became the UK's best-known equity manager during his 30 years at Invesco Perpetual before setting up his own asset manager. The firm has already attracted more than £9bn in assets under management.

Mark Dampier, head of research at fund supermarket Hargreaves Lansdown, said the level of investor interest "shows the strength of the Woodford brand and the interest in this long-term investment opportunity".

Mr Woodford's following among retail investors, and heavy pre-launch promotion of Patient Capital by consumer-facing platforms such as Hargreaves and Fidelity Personal Investing, mark the fund out from other recent trust launches largely bought by multi-managers and private wealth managers, said analysts at Numis Securities.

Mr Dampier said the fund could be a suitable investment for individuals, particularly younger investors prepared to wait several years for a return.

"You've got to be looking at this on a 10-year-plus investment horizon," he said.

Patient Capital's pre-launch popularity may drive it to trade at a premium to net asset value, added Mr Dampier. The Fidelity China Special Situations trust, launched by well-known manager Anthony Bolton, raised £460m for its initial public offering in 2010 and quickly moved to trading at a premium of 10 per cent. Terry Smith's recent Fundsmith Emerging Equities Trust also went to a premium.

If the same happens with the Woodford trust, investors may wish to be patient and see if the premium reduces over time, Mr Dampier said.

"You have to make a judgment call when you see it, but I don't think there's anything clever about buying at a 20 per cent premium," he said.

Woodford's team said that the product's size would not affect the goal of fully deploying its capital within one to two years of launch. Once this is achieved, the fund will hold 50 to 100 stocks, of which 75 per cent will be invested in early-stage companies; the rest will consist of mature companies.

Mr Newman said that the fund's investment team already had "more than two dozen early-stage and early-growth stocks in the pipeline".

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Targeting returns of more than 10 per cent a year, Mr Woodford intends to focus on companies whose offering is based on intellectual property. He has a record of investing in unquoted biotechnology companies and more recently has begun investing in alternative finance firms.

While most funds charge fees as a percentage of overall assets, the Patient Capital Trust will charge only a performance fee, to be paid in shares of the fund itself. Income from the mature stocks it holds will pay the running costs of the fund, the company has said.

The launch is the latest and by far the largest in a series of new trusts focusing on small and early-stage companies.

The River and Mercantile UK Micro Cap trust raised £50.6m in December, while the noted small-cap manager Gervais Williams is seeking to raise £100m for the launch of the Miton UK MicroCap Trust this month.

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