Woodford Investment Management has announced plans to launch an investment trust focused on deploying what it describes as ‘patient capital’.
The Woodford Patient Capital Trust will invest in both mid and large-cap mature companies as well as both quoted and unquoted early stage growth companies.
Speaking at a dinner in London on Thursday, Neil Woodford, WIM CIO, said the trust was something he had wanted to do for a long time.
“I have been investing in early stage businesses for the best part of 20 years, in unquoted companies for the best part of 10 years and what has become very clear is that we have an amazing, unmined opportunity here.
“It is a great opportunity for investors and also a great opportunity to do some good for the economy. Britian has a great record of fantastic innovation for centuries, but we are very very poor at converting this great intellectual resource into commercial success.”
According to Woodford, the reason for this poor conversion rate is a lack of long-term, patient capital.
“The problem with the venture capital industry is that they have far too-compressed a time scale. As soon as they invest, they are thinking about the exit event. So, what little capital has been invested is often the wrong sort of capital, it is far too short term,” he added.
While the full details of the trust will only be provided in the prospectus that is due out later in February, the firm did say it is looking to raise £200m and will target a return of 10% per annum over the long term.
However, Woodford said: “I have an ambition to deploy considerabley more than £200m and I believe we have the capacity and a pipeline to do that over time.”
The firm added: “Initially, the Company is expected to have a portfolio that is dominated by mid and large-capitalisation listed, mature companies that offer growth opportunities.”
Over time, however, over time the exposure to early-stage companies and early-growth companies is expected to gradually build.
Woodford added the trust will look to replicate the 15 unquoted holdings currently in the Wordford Equity Fund and the group is also looking at 12 other possible investments, with others in the pipeline.
Fees
While details on the exact nature of the fee structure will only be made available in the prospectus, the firm said that the company will not pay a management fee to the Portfolio Manager for its services. It will instead be awarded only fee based on performance, payable in ordinary shares.
