Woodford feels heat as key ally quits

BELEAGUERED Neil Woodford has lost a key ally on the board of Woodford Patient Capital Trust.

The decision by bioscience entrepreneur Steven Harris to step down after four years has renewed speculation that Woodford may be fired from managing his own investment trust.

The Mail first revealed that the board of Patient Capital was weighing up whether to oust the fund manager in June.

That came days after Woodford suspended his flagship Equity Income fund, denying savers access to their cash.

Patient Capital is separate from Equity Income but has been caught up in the crisis.

Shares in Patient Capital are down 45pc since Equity Income was suspended.

And the board of Patient Capital, which is supposed to challenge Woodford and ensure the trust is run with investors’ best interests in mind, has been accused of being too close to the stock picker.

Harris was the chief executive of Circassia Pharmaceuticals, a drugs company in which, until recently, Woodford was the largest shareholder. Another three of the board’s five members – Susan Searle, Scott Brown and Louise Makin – are still leading companies which Woodford owned hefty stakes in.

And more recently investors have been wondering whether Woodford has become too experimental with his punts. The value of one of his holdings – controversial nuclear cold fusion business Industrial Heat – was slashed by 40pc last month, writing millions off its value. But now there will be another pair of eyes trained on Woodford, as Patient Capital announced the appointment of Jane Tufnell, an investment trust veteran, to its board. Investors welcomed the arrival of a new member as shares in Patient Capital edged up 3pc, or 1.25p, to 42.35p.

Savers with money in the trust have taken a battering since June, when Woodford was forced to suspend his Equity Income fund after too many of them tried to pull their money out at once.

Worries that Woodford had lost his touch caused the trust to plummet.

Patient Capital is likely to drop out of the FTSE 250, when the index reshuffles this evening. Unlike the Equity Income fund, where Woodford must sell his holdings in order to return money to savers if they want to leave, the Patient Capital Trust is listed on the stock market.

This means investors simply buy and sell its shares on the stock market at the going rate.

The almost unprecedented decision to freeze investors in his Equity Income fund forced even Woodford’s board of close associates at the Patient Capital Trust to consider sacking him. Relations between the embattled manager and the board deteriorated as Woodford revealed he had sold more than £1m of shares in the trust in early earl July Jul to pay pa a tax ta bill, bill but failed to notify the board for three weeks.

At the end of July, the trust confirmed in a public statement that it was holding talks with other investment groups about potentially switching manager.