Is Neil Woodford planning an audacious comeback?

Just a few months after the collapse of his troubled investment fund, Neil Woodford is reported to be trying to raise backing for a new £500 million private venture.

Media reports suggest that Woodford is talking to potential investors to try to buy positions in some of the unquoted stocks previously part of the flagship Woodford Equity Income Fund (WEIF), after being sacked from the fund and winding down his Woodford Investment Management business last year.

If confirmed, the comeback attempt – first reported by Sky News – would come only a few months after investors in the WEIF were forced to accept major losses in the holdings, and were incensed when Woodford blocked money going in or out.

Unquoted and illiquid stocks in the WEIF – which include a number of small-cap biotechs – were the focus of a proposed £550 million takeover deal by life sciences investment group WG Partners which fell through last month.

It seems Woodford’s comeback plans are in the embryonic stages, and that he isn’t planning to use any money from retail investors, which would avoid regulatory liabilities that followed the closure of the WEIF last October, and is polling institutional investors for support.

By January of this year, investors in the fund had recouped nearly three-quarters of their outstanding cash, equivalent to £2.1 billion from the £2.9 billion total, from the disbursement of listed company assets managed during the liquidation process overseen by administrator Link Fund Solutions. That included the listed biotech ReNeuron.

The transfer of a smaller block of unquoted and illiquid assets – which include biotechs like Immunocore, Rutherford Health and Oxford Nanopore – is being managed by PJT Park Hill and is still pending, raising fears that some could be sold off cheaply in a ‘fire sale’.

Unidentified sources suggest that Woodford’s latest proposal focuses on buying up positions in unlisted biotechs at a discount, but cautioned that the plan may never come together.

They have also said he is exploring the idea of taking private some of the companies, such as litigation funder Burford Capita, with which he has had a long association.

The news comes amid resentment among fund investors that Woodford and the chief executive of the WEIF – Craig Newman – pocketed almost £14 million in dividends in the 12 months leading up to the fund’s collapse.

Woodford was singled out in a report on the UK biotech sector published by the Bioindustry Association (BIA) and Informa earlier this year, which found that funding fell 40% in 2019, from £2.2 billion in 2018 to £1.3 billion.

It’s worth noting however that 2019 ranked as the third best year for the sector behind 2018 and 2015, and represented a 400% improvement on funding in 2012.