Guernsey's International Stock Exchange (Tise) has lifted the suspension of dealings in fund manager Neil Woodford's shares in cold fusion specialist Industrial Heat.
The shares, along with Woodford's stakes in Benevolent AI and Ombu, were suspended on 11 April. The lifting of the suspension to the shares in Industrial Heat this evening follows the lifting of the Benevolent AI and Ombu suspensions three weeks ago.
Woodford had listed his stakes in the three unquoted companies, along with his shares in Ibiza property developers Sabina Estates, in Guernsey as a means of keeping his Woodford Equity Income fund within the City regulator's rules on unquoted company holdings. Financial Conduct Authority (FCA) regulations dictate funds cannot hold more than 10% of their assets in companies not listed on a stock exchange.
The four stakes account for around 9.6% of his £4.4 billion Woodford Equity Income fund. Without the Guernsey listings, or the exemption of companies that have committed to list within 12 months, like Oxford Nanopore and Accelerated Digital Ventures, the fund's unquoted holdings would stand at 18% of the portfolio.
The International Stock Exchange Authority, which regulates Guernsey's stock market, issued a short statement announcing the lifting of the suspension to dealings in Industrial Heat.
'On 11 April 2019, dealings were suspended by The International Stock Exchange Authority in the Tise-listed securities of IH Holdings International Limited and discussions have been ongoing with the issuer and its sponsor in the intervening period,' said managing director Mark Nicol.
'The suspension of dealings in the Tise-listed securities of IH Holdings Limited was lifted at 18:00 this evening.'
As with the lifting to the suspension of dealings in Woodford's stakes in Benevolent AI and Ombu, no details were given on the reasons behind the move, or why dealings were initially suspended.
This evening's move clears a potential hurdle to Woodford's effort to keep his Equity Income fund below the FCA's 10% limit on unquoted company holdings. Had Guernsey's stock exchange authority followed the suspensions with a cancellation of listings, he would have been required to bring the fund below the limit by selling some of his unlisted stakes.
But the lifting to the suspension of the dealing in the shares is likely to prove academic in practice. Since Woodford started listing the stakes in Guernsey in late 2017, not a single one of the shares has changed hands.
Industrial Heat is the second largest holding in Woodford Patient Capital Trust (WPCT), accounting for 8.9% of its assets. Both the trust and the Equity Income fund's shares in the company are listed in Guernsey.
Benevolent AI is the third largest holding, accounting for 8.3% of the assets, though only the Equity Income fund's stake is listed in Guernsey. Ombu is a 1.9% stake in the trust, which does does hold Sabina Estates.
Following a controversial share swap in March, Woodford Equity Income fund became the second largest single shareholder in Patient Capital with a 9% stake. In a £78.9 million deal the fund sold sell stakes in five unlisted companies in exchange for shares in the £720 million trust. Although the transaction temporarily reduced the fund’s exposure to unquoted companies, it incurred a 13% markdown due to the wide discount to net asset value at which the trust’s shares trade.