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Woodford sells £40m AJ Bell stake to Invesco Perpetual

Woodford sells £40m AJ Bell stake to Invesco Perpetual

Woodford Investment Management (WIM) sold its £40 million stake in AJ Bell shortly before the firm announced its intention to float on the market.

According to reports, Woodford sold its 8% holding in the wealth management and platform provider to his former employers Invesco Perpetual in February.

The news comes after AJ Bell announced this weekend that it has hired Numis to explore a potential IPO, which could happen before the year is out.

The 8% stake was held in Neil Woodford’s flagship Equity Income fund, which has endured a tough time of late, with redemptions on the back of poor performance resulting in its size decreasing from £10.2 billion 12 months ago to £6.85 billion.

Woodford (pictured) first bought a stake in AJ Bell back in 2007, when he was at Invesco Perpetual, and that holding was increased in subsequent years.

The position is now overseen by Woodford’s successor on the Invesco Perpetual equity income franchise, Mark Barnett, and amounts to 45%, following the acquisition from WIM.  The £4.98 billion Invesco Perpetual Income fund alone held 6,906,522 AJ Bell shares, which it valued at £69.13 million at the end of December. It was a 1.39% fund position, and it is understood to be also held in Barnett’s High Income fund.

The WIM disposal came as the Income fund came close to breaching its 10% private equity limit, which fell from 9.69% to 9.47% after the AJ Bell sale, according to the Financial Times

Meanwhile, a report on Sky this weekend suggested WIM had been unable to participate in a £150 million fundraise at challenger bank Atom following the outflows at the group.

Woodford became the ‘cornerstone’ of Atom’s capital base when he backed its launch in 2014, which at the time was the UK’s first digital-only bank.

In order to keep his stake at about 20%, WIM would have had to pour millions more into Atom in its latest cash call. By deciding not to invest more, his stake has been diluted to 18%, according to a spokesperson.

In a statement, WIM suggested the disposal of AJ Bell and refusal to participate in the Atom fundraise was not due to liquidity concerns, following the large outflows.

‘Neil has to make decisions about the allocation of capital all the time. It has always been our clearly defined strategy to nurture young technology-intensive businesses through the early stages of their development,’ a WIM spokesperson said.

'In some cases, such as Atom Bank, once those early hurdles have been overcome it is entirely appropriate these businesses raise capital from other investors rather than Woodford. 

‘When we sell, or don’t participate in a funding around, it is not a function of an inability to follow on, but typically a function of our preference to focus our capital on businesses earlier in their lifecycle or which have the potential for more attractive returns.

‘Despite outflows, we have supported follow-on and new funding rounds in more than 20 companies in the past six months, in addition to the recently announced rights issue for Provident Financial.’

Woodford bought more shares in Provident Financial at the end of February after the embattled lender launched a rights issue following the publication of its full-year results. 

The moved increased Woodford's Provident stake from 23% to 24.4%. 

 

 

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