Woodford plans new share issue

Neil Woodford relaxing

In an announcement to the London Stock Exchange on Wednesday (13 January), the board of the Woodford Patient Capital trust has indicated that it intends to issue a fresh tranche of shares for the popular trust.

'The Woodford Patient Capital Trust has successfully deployed the proceeds of its initial public offering and has a substantial ongoing pipeline of investment opportunities.

'With the current market conditions in mind, the board is currently looking at ways it can raise additional capital in the year ahead and will consult with, and gauge interest from, investors,' the statement says.

Launched in April 2015, Woodford Patient Capital raised a record breaking £800 million during its initial offer period. This significantly surpassed the trust's £200 million target and made it the largest initial public offering (IPO) for a UK-listed investment trust in market history.

Star manager

The star status of manager Neil Woodford secured the trust's popularity and shares have traded at a significant premium to net asset value (NAV) since its launch, from a high of more than 15 per cent to 5.2 per cent as of 12 January.

This is despite the trust shedding close to 14 per cent of its share price value and more than 8 per cent of its NAV over the six months to the same date, as a number of its biotechnology holdings have plummeted - particularly scandal-stricken US firm Northwest Biotherapeutics.

Commenting on the board announcement, Mark Dampier, head of investment research at Hargreaves Lansdown, says: 'Neil Woodford believes there remain plenty of unexploited opportunities in early growth businesses and he now wants to consider raising further money specifically to take advantage of these. In his view there are some outstanding investment cases, but they will not be around forever.'

The trust's board has already issued new shares since Woodford Patient Capital's IPO, creating 27 million shares between August and September 2015, increasing the trust's market capitalisation to £815 million as of 12 January.

Shares tumbled 2 per cent following the announcement on Wednesday as a fresh share issue is likely to further reduce the trust's premium to NAV, indicating that current shareholders may be banking profits while shares remain at a premium.

Dampier adds: 'A new large tranche might cause the trust's share price to fall to a discount in the short term. However, the fact that Woodford believes the investment case remains so strong is good for the long-term investor, although there are no guarantees of future performance.'


More about