The board of the pharmaceutical cash shell company said it had “evaluated several potential reverse takeover candidates” with major shareholders in the first quarter of 2018 but had concluded a potential takeover was “not deemed to be practical”.
Woodford is the largest shareholder, owning about 33% of the business. Abaco Capital makes up 0.05%, roughly £4m, of his £6.6bn flagship Equity Income fund. It is not held in his Income Focus fund or Patient Capital trust.
Abaco Capital, formerly known as Oxford Pharmascience Group (OPG), will seek shareholder approval for its proposed de-listing and liquidation at its annual general meeting on 8 May.
Following its demerger from its subsidiary Oxford Pharmascience Ltd (OPL) last December, which saw it transfer most of its assets and operating businesses, the firm rebranded to Abaco Capital and became an Aim-listed cash shell company.
Under Aim rules, Abaco was required to complete an acquisition within six months of the demerger to continue trading on the index, which Oxford Pharmascience said would likely be in the pharmaceutical, biotechnology or technology sectors.
Historically, OPL has held the majority of the group’s commercial assets, drug development assets and intellectual property.
After the demerger, all of OPG’s shares in OPL were distributed to existing shareholders, leaving the shell company with £19.3m in cash resources.
News of the proposed de-listing was included in its final results, in which the group posted a widened pre-tax loss of £2.1m from £1.4m a year prior. Within the year, its net assets fell from £22.6m to £19m.
Abaco Capital’s bombshell is yet another blow for star manager Woodford, who has suffered stock-specific setbacks from some of his biggest listed holdings already this year, including Provident Financial and Capita.
At the end of March, the LF Woodford Equity Income fund’s assets dipped below £7bn for the first time since 2015, shrinking from £8.2bn at the start of the year to £6.6bn. His fund was also ejected from the IA UK equity income sector for failing to deliver higher income than the FTSE All Share index over a rolling three-year period.
Its performance over three years is no longer in negative territory but the fund’s total return of 0.4% is significantly behind the IA UK All Companies sector average of 18.5%, according to FE.
However, Woodford remains bullish on the outlook for the UK economy, where he is heavily invested, arguing there is an “increasing possibility” it could be the fastest growing of all OECD nations by the end of this year.
Woodford Investment Management declined to comment.