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Guernsey expects to 'resolve' Woodford stocks row imminently

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Guernsey expects to 'resolve' Woodford stocks row imminently

Guernsey's International Stock Exchange has said it expects to resolve the suspension of dealings in fund manager Neil Woodford's unquoted stocks in the next few days. 

The Channel Islands stock market had dealt a blow to the fund manager's strategy of reducing his Equity Income fund's unquoted holdings when it suspended dealings in Benevolent AI, Industrial Heat and Ombu earlier this month.

The manager had listed his stakes in the private companies in Guernsey as a means of remaining within the City regulator's rules on the amount of unquoted company stocks a fund can hold, as Citywire revealed last month.

Mark Nicol, managing director of The International Stock Exchange Authority, said following the suspension of dealings on the three stocks last Friday 'discussions have been ongoing with the sponsor and issuers'.

He told Citywire before the Easter break: 'It is anticipated that the matter will be resolved in the early part of next week. An announcement will be forthcoming immediately thereafter.'

The suspension had come as a shock to Woodford Investment Management, the three companies and Belasko Corporate Finance, which acted as sponsor for all of Woodford's stakes placed on Guernsey's exchange.

The three stocks account for over 7% of the £4.4 billion Woodford Equity Income fund and their suspension risked the fund committing a passive breach of the Financial Conduct Authority's (FCA) 10% limit on funds' unquoted company exposure.

Had the Guernsey authority ultimately cancelled the listings, the fund's unquoted exposure would have risen above 12% based on current weightings.

Woodford's former employer Invesco has also been affected by the suspension. It has emerged the fund group holds half of the Guernsey shares in the smallest of the listings, early stage investor Ombu.

The majority of Invesco's stake is held by the Invesco Income and High Income funds Woodford used to run, which are now managed by Mark Barnett.

Those funds have a much lower weighting to unquoted stocks than Woodford's Equity Income fund and have continued to classify Ombu as unlisted even after the shares were moved onto the International Stock Exchange.

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Mark Barnett
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