Woodford’s Equity Income Fund has declined from about £10 billion ($13 billion) to about £3.7 billion after a rash of investors pulled their money.
The fund has frozen redemptions because it is not liquid enough to meet its clients’ demands for their cash.
Woodford invested in too many illiquid, private, unlisted stock offerings.
The so-called “secondary” market for private equity isn’t as liquid on the way down as it is on the way up, sources tell Business Insider.
The collapse of Neil Woodford’s £10 billion ($13 billion) investment fund has given us a glimpse of what the market might look like if — or rather, when — a downturn comes to the opaque “secondary” market of unlisted private equity stocks.
Woodford’s Equity Income Fund is now down to about £3.7 billion after a rash of investors pulled their money. That triggered a freeze on redemptions, and the remaining investors are now stuck inside the rapidly declining fund. Investors don’t know when they will be able to get their money out.
Now, the short-sellers are circling the rest of Woodford’s empire.
The redemption freeze came because cash-out demands were coming in faster than Woodford was able to sell the equities it held.
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Source:: Businessinsider – Finance