Citywire-AA rated manager Paul Mumford has joined Invesco in backing beleaguered baker Patisserie Valerie's rights issue, but others invested in the scandal-hit stock have been wary.

Mumford invested a further £100,000 in the rights issue, priced at 50p per share, well below the 430p at which the shares were trading prior to their suspension in October after the discovery ‘significant, and potentially fraudulent, accounting irregularities’ and a £20 million black hole in its accounts.

Patisserie Holdings (CAKEP) shares had accounted for 1.5% of Mumford's £67 million Cavendish AIM fund before the suspension.

Mumford took heart from Patisserie Valerie chairman Luke Johnson's propping up of the business with £20 million of his own money in October as it faced a winding up order from the taxman HM Revenue & Customs.


Fund group Invesco meanwhile appears to have backed the rights , upping its stake to 7.8% of the company's shares last month, while Alexandra Jackson, manager of the £53 million Rathbone UK Opportunities fund, took part 'in a small way'.

But Phil Harris, manager of the £167 million Edentree UK Equity Growth fund, declined to take part. 


Harris' stake in the company accounted for 1.8% of his fund before the scandal broke. He said he did not invest further 'for two main reasons - the fraud at the time could have been materially worse than the initial indication (and very often that is the case) and the earnings estimates have been reduced and were still uncertain and may fall further'.

'As a result valuation of the residual equity is highly speculative and with the stock unlikely to come back from suspension for some time I could not make a valuation case to put more money in,' he added.

The managers of Franklin UK Smaller Companies meanwhile said their fund took a 1.1% hit to performance in October, with Patisserie Holdings its biggest detractor of returns that month.

Run by Dan Green, Mark Hall, Paul Spencer and Richard Bullas, the £368 million fund had 1.7% of the portfolio invested in the business at the beginning of October.


Patisserie Valerie’s former chief financial officer Chris Marsh was suspended, arrested and then resigned following the allegations of fraud.

He was replaced last week by Nick Perrin as interim chief financial officer, formerly finance director of another AIM-listed business, veterinary group CVS (CVSG).

Patisserie Valerie’s chief executive Paul May also resigned last month and was replaced by so-called turnaround specialist Stephen Francis.