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Woodford's peer-to-peer exodus continues with VPC sale

Fund manager follows £88 million sale of stake in P2P Global Investments by offloading his entire £40 million holding in VPC Specialty Lending

Woodford's peer-to-peer exodus continues with VPC sale

Fund manager Neil Woodford has followed his £88 million sale of his stake in peer-to-peer lending trust P2P Global Investments (P2P) by offloading his entire £40 million stake in rival VPC Specialty Lending (VSLV).

Woodford, who had been the second largest shareholder in VPC with 16.4% of the stock, sold his shares on Monday, having disposed of his stake in P2P on Thursday.

The two sales mark a significant retreat for the manager who has been one of the biggest backers of the peer-to-peer lending sector.

They come as the manager is forced to meet redemptions from investors in his flagship Woodford Equity Income fund amid poor performance. 

The fund is rooted to the bottom of the Investment Association's UK All Companies sector, down 7.6% over three years.

Initial Lipper estimates suggest withdrawals from the fund eased to £125 million in April, down from £160 million in March.

The sale of the stakes in the two trusts this week will have raised just over £120 million for the Equity Income fund to help finance those investor withdrawals. VPC was a 1% position in the fund at the end of March.

Woodford bought into VPC's flotation in 2015, the same year he took a stake in its larger rival P2P Global Investments.

Both have delivered disappointing performance. Stock market data suggests Woodford sold his stake in VPC at 71.5p per share, well down on the 100p flotation price at which he bought the bulk of his stake.

As with P2P Global Investments, VPC was hit by defaults on some of its consumer loans. Chicago-based managers Victory Park Capital switched their approach to lending to peer-to-peer platforms and after a shaky start, the new focus has at least resulted in an improvement to the dividend, up to 8p last year.

Sale of the stake removes another source of income for Woodford's fund, with the shares currently yielding just over 11%.

Woodford's only remaining stake in a direct lending trust is in Honeycomb (HONY), which has bucked the trend for poor performance in the sector. 

Woodford's holding of 21% of the shares equates to a 1.8% holding in the Equity Income fund and a 3.3% position in his smaller Woodford Income Focus fund.

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