Neil Woodford launches record £800m investment company

Neil Woodford

Woodford Investment Management has launched the biggest ever UK investment company, successfully raising £800 million by the time the Woodford Patient Capital Trust launched on the London Stock Exchange on 21 April 2015.

The trust - noted for its unique fee structure, which only pays the managers when the trust outperforms by a certain margin - was oversubscribed despite its limit initially being just £200 million.

On 10 April 2015 Woodford said he was increasing the size of the launch from £200 million to £800 million to reflect investor demand.

The interest is no surprise, given that the vehicle comes from the firm created by star fund manager Neil Woodford, who managed the outperforming Invesco Perpetual Income and High Income funds until leaving to set up his own firm in April 2014.

The launch breaks the previous record of £549 million set in 1994 by Mercury European Privatisation. The largest non-UK launch - debt fund Prodesse, based in the Channel Islands – raised £1.479 billion in 2005.

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Strong track record

Ian Sayers, chief executive of the Association of Investment Companies, says: "It's a testament to the investment company sector that this distinctive company is taking advantage of the benefits of the closed-ended structure, such as the ability to invest in specialist, small, less liquid assets."

Woodford Patient Capital opened trading at 100p per share at 8am on Tuesday 21 April 2015, shooting to an early premium of 5.9% before settling at 102.5p per share (a 2.5% premium) by mid-morning.

Commenting on the trust's listing, Numis Securities says: "We expect the fund to trade well in the near term given Neil Woodford's strong track record and the high profile of the vehicle. Furthermore, we expect the fund to be eligible for inclusion in the FTSE All Share as a FTSE 250 constituent in June, which will lead to buying by index trackers.

"The fund has a large pool of capital given its focus on early-stage companies, and its progress against its investment timetable will be followed closely given the increase in size. [However] we believe it stands a good chance of faring better than previous ‘blockbuster’ investment trust IPOs that have often failed to meet the inflated expectations of retail investors."

This article was written for our sister website Money Observer

Your Comments

Maybe it is worth remembering that Neil Woodford's successes seem to have been largely based on a rather cynical combination - profiting from those addicted to smoking and then profiting from the pharmaceuticals needed to treat them.