A deal to sell Neil Woodford’s administrator Link Fund Solutions has been thrown into doubt as three senior directors have left the bidding company Waystone Group, in another setback for thousands of investors awaiting compensation from Woodford’s collapsed funds.
Dublin-based Waystone entered into exclusive talks earlier this year to buy LFS, the UK arm of Australian company Link Group, before the exclusivity period ends on Friday.
However, Waystone’s chief executive Derek Delaney, chief financial officer Glen Magee and chief operating officer Paul Cahill have left with immediate effect following a disagreement over the future strategy of the company, according to people familiar with the situation.
The departures have sparked concerns over the LFS deal. Link Group said on Thursday morning that talks with Waystone were continuing, but warned that it would miss Friday’s deadline. It is aiming to reach an agreement next month.
Link added that although “substantial progress” had been made, “there can be no certainty that any agreement will be reached . . . with Waystone”.
LFS was responsible for overseeing liquidity in Woodford’s funds, which were suspended in 2019 when investors rushed to withdraw their money as performance plummeted. Link said last month that proceeds from the sale of LFS would be used to compensate investors.
The collapse of Woodford’s flagship £3.7bn Equity Income fund left some 300,000 investors trapped, in one of the biggest recent scandals in UK investment management.
The UK’s Financial Conduct Authority said last month that it had “provided time” for Link Group to sell LFS and other assets to raise the money to compensate investors. It noted that the amount of redress would be based on failings at LFS in managing the liquidity of Woodford’s funds.
The watchdog also said it was in “advanced talks” about striking an agreement with LFS, based on a scheme to pay out Woodford-related liabilities. An agreement could mean LFS avoids enforcement action, including a potential £50mn penalty.
Woodford rose to fame at Invesco, before leaving in 2014 to set up his eponymous business with former Invesco salesman Craig Newman as chief executive.
The manager’s Equity Income fund invested in listed and unquoted stocks, but came unstuck when markets fell and exposed some of his stock picks and holdings in illiquid private companies.
Waystone said: “Given our growth and the current scale of the business it was felt that the right thing for the company was to introduce new management to take the business through the next stage of its journey.
“The board has already started the process to appoint their successors and in the interim Nancy Lewis, currently chair, will lead the business on a full-time basis, supported by a strong leadership team.”
It added: “These departures are in no way linked to anything of a financial or regulatory nature and all regulators have been informed of these changes.”
