According to Investment Week calculations, the fund has fallen two-fifths in value, excluding the payment of a £20m capital distribution to investors.
On 6 October 2022, Link Fund Solutions managing director Karl Midl wrote to investors informing them of the final capital distribution to date and revealed the fund’s NAV stood at £79.9m on 30 September 2022.
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According to the fund’s unaudited interim report for the half year to 30 September 2023, the fund’s NAV now stands at just £36m, a reduction of 40% from £59.9m, the fund’s 30 September 2022 NAV excluding the £20m distribution.
Between the announcement of the distribution and investors receiving their payment, the fund had already seen a NAV reduction of 16% to £50.3m, as a result of a further decline in the share price of Benevolent AI, a holding which “continues [to] disappoint”, according to the latest report.
Since its listing on Euronext on 25 April 2022 at a price of €10 per share, the share price has collapsed and trades at just €0.54 per share, a fall of 94.6% in less than two years, according to Morningstar Direct.
The fund was subject to a condition of listing that prevented it from selling shares for a period of six months, at which point shares were trading at €4. Since the fund was able to sell shares, Benevolent AI has fallen 86.5%.
Mafic collapse
The report also revealed that just six holdings of a total ten hold any value, with the remaining four companies representing no value in the fund.
Among these are US basalt manufacturer Mafic, in which Link Fund Solutions made at least two follow-on investments, in March and November 2021, as “part of its objective of seeking to preserve capital value”.
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At the time, Midl wrote to investors explaining the move: “We did not anticipate making further investment in Mafic at the time of our previous letter to investors, but we believe that this further investment was in investors’ best interests as the company seeks to move to increased production.”
Mafic notified the Cleveland County Economic Development Partnership of its effective closure from 31 October 2022, according to reports from local paper Shelby Star, which published the news in July 2023, just three years after the company’s only site began production.
The fund’s annual report for the year to 31 March 2023 revealed the holding had been held at zero since 31 December 2022, despite only being advised by Mafic on 4 April 2023 that the assets of the company were set to be repossessed by the bank.
The former Woodford Equity Income fund currently holds 799,424 shares in Mafic, 100,000 in a Mafic convertible loan, 1,000,000 in Mafic convertible series 1, 226,737 in Mafic convertible series 2 and 1,142 in Mafic warrants, all of which have no value.
£1bn lost during wind-up
At the time of suspension in June 2019, the fund held a NAV of approximately £3.56bn, of which £2.56bn has been paid to investors over five capital distributions.
With a remaining NAV of £36m, this means £964m of investor capital has been eroded over four years, just over 27% of the fund’s value at suspension.
Investors in the fund will be able to attend a scheme meeting on 13 December to vote on a proposed scheme of arrangement, which has been backed by the Financial Conduct Authority. The deadline to register to vote has now passed.
