New Woodford venture expects to triple investor cash in three years

Disgraced manager bullish on healthcare prospects

James Baxter-Derrington
clock • 4 min read

Neil Woodford's new portfolio projects it will more than triple investor capital over three years, according to a sales document that was sent to potential investors on an unsolicited basis.

WCM Partners Healthcare, Woodford's company based in the Cayman Islands, produced the pitch detailing an eight-stock portfolio comprised of six unlisted and two listed companies.

The firm has yet to apply for regulatory approval anywhere in the world, but both the UK and Jersey regulators have issued statements suggesting it might be difficult to gain a green light from them, while the Cayman Islands regulator was keen to clarify no submission for approval had been received to date.

Cayman regulator refutes Woodford registration claims - reports

When approached for comment on the figures, WCM Partners did not respond and instead removed the projections from its pitch document.

When questioned on the motives behind removing the figures, the firm declined to comment.

Oxford Nanopore

The largest holding is Oxford Nanopore Technologies, a company near-synonymous with the disgraced manager, which represents 43% of the total fund. 

The private biotech firm has made more recent headlines, as M&G invested £35m into the company ahead of its initial public offering due later this year, with chief investment officer Jack Daniels describing the firm as "an example of how institutional investors can play an important role in accelerating growth in companies that provide a wider benefit to society".

According to Investment Week calculations based on projected internal rates of return offered by WCM Partners Healthcare in its sales pitch, the firm believes Oxford Nanopore Technologies will return 3.05x over three years with an internal rate of return (IRR) of 45.1%.

Oxford Nanopore represents almost half of new Cayman-based Woodford fund

This prediction is largely representative of the overall portfolio, which is projected to generate a return of 3.34x over three years. 

Despite its heavy weighting, Oxford Nanopore is far from the biggest returner by WCM Partners estimations, with AMO Pharma, which represents 6% of the portfolio, predicted to grow 11.2x over three years with an IRR of 124%. It is described as a "late-stage biotechnology company focused on clinical-stage assets".

Induction Healthcare, which comprises 1.5% of the fund, is an AIM-listed company described as "building a virtual care platform which can help the digital transformation of healthcare systems across multiple geographies". It is projected to return 4.6x its original investment, an IRR of 66.1%.

The firm Woodford projects will create the largest return for investors is also the one in which the firm would hold the smallest weighting - just 0.2%. 

Novabiotics, a "clinical-stage biotechnology company focused on the design and development of first-in-class anti-infectives for difficult-to-treat, medically unmet diseases," is anticipated to grow 15.5x in three years, representing an IRR of 149.1%.

Veronique Morel, senior wealth manager and branch principal at Raymond James, described the disparity of weighting versus IRR as "very strange".

"You have one stock with a 29% IRR and a 12% weighting and you have another with 149% IRR but only 0.2% weighting out of eight stocks. Surely you want to invest more into the stock that is likely to perform better?"

The only firm which is not offered a three-year prediction by the new Woodford venture is Viamet, described as a "late-stage biotechnology company focused on the development of a novel anti-fungal agent for the treatment of recurrent vulvovaginal candidiasis and nail fungus".

Viamet is the second-largest holding in the fund (18%) but is afforded only a one-year prediction, although this is still projected to perform strongly, growing 2.6x over 12 months, an IRR of 158.3%.