Delistings hit Woodford Fund
UK REGULATORS are ‘liaising with all parties’ after a fund already in the spotlight was hit by two delistings from the Guernsey-headquartered International Stock Exchange.
The LF Woodford Equity Income Fund has been under scrutiny over holdings listed on TISE. However, it has now breached a 10% ‘unquoted limit’ allowed for such holdings under European fund regulations following the cancellation of the listings of Benevolent AI and Industrial Heat shares on TISE.
Statements on the exchange’s website said that the listings had been cancelled at the ‘request of the issuer’.
*Mark Nicol, Managing Director of The International Stock Exchange Authority, which is the market operator of The International Stock Exchange (TISE), said this evening [Wednesday]: 'I can confirm that as per the recent market announcements, the TISE listings of the securities of three issuers – Ombu Group Limited, IH Holdings International Limited and BenevolentAI Limited – have been cancelled.'
The UK Financial Conduct Authority, which regulates the fund due to its UK status, said: ‘As you would expect the FCA is well aware of the issue and has been liaising with all parties.’
The fund’s authorised corporate director Link Fund Solutions, in an online question and answer page, said the delistings meant an ‘inadvertent passive breach’ of the fund’s 10% unquoted limit would occur.
‘The FCA’s guidance, as for all UCITS limits, is that funds should be brought back into compliance following an inadvertent passive breach in a manner that is in the clients’ best interests and within six months of the date of discovering the relevant breach,’ said the Q&A page.
‘Following the inadvertent passive breach, action to bring the fund back into compliance is already underway. On 3 May, we informed investors that the fund’s exposure to unquoted securities would be significantly reduced ¬- including those listed on exchanges where there is currently little or no trading activity.
‘The decision by Benevolent AI and Industrial Heat to delist from Tise will have no impact in how the assets are managed within the fund.’
Earlier this week, Link Fund Solutions also announced that the suspension of dealings in the LF fund would remain in place – most likely until early December - to protect the interest of all investors while a repositioning strategy of the fund’s portfolio was implemented.
*This paragraph has been added to the original story as a result of new information.
