Neil Woodford saga could put investors off long-term bets
Fallout from the collapse of Neil Woodford’s investment empire could deter investors from making long-term bets on young companies, the head of the state-owned British Business Bank’s venture capital arm has said.
British Patient Capital chief executive Catherine Lewis La Torre told City PM that fallout from the scandal “definitely has repercussions in terms of the image of patient capital, which is unfortunate”.
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“In terms of our goal to persuade institutional investors that the UK is a good place to be investing, it makes that task harder,” she said.
Woodford had been a prominent advocate of providing longer-term investment to young firms through his listed Patient Capital Trust, but he stood down from the trust and shuttered his investment company after becoming overwhelmed by a scandal first sparked by the suspension of one of his funds in June.
Speaking after the publication of British Patient Capital’s first annual results since being established last year, Lewis La Torre said the fund would continue “making long-term investments to support innovative companies across the UK”.
The group was created in response to a lack of patient capital – long-term finance required by ambitious firms after they pass the startup stage – in the UK. It does not invest in companies directly, but instead picks venture capital firms through which to invest in them.
British Patient Capital said it had already become the UK’s largest domestic investor in venture and venture growth capital in its first year.
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The group has made 12 investments with a value of £334m during that period. Combined with the seed portfolio it acquired when it launched, it now has a portfolio of 31 fund investments of £600m in 322 businesses.
British Patient Capital reported a gross return on capital employed of 8.2 per cent during its first year, and its portfolio delivered an internal rate of return of 13.3 per cent.