Link Group in talks to sell LFS and settle FCA probe

Link Group is in talks to sell Link Fund Solutions, the Australian firm confirmed on Monday, as it edged closer to settling a probe into the Woodford Equity Income Fund scandal.

Link said that following a period of due diligence, it had entered exclusive negotiations with Ireland’s Waystone Group over the sale of the UK-based business, excluding Woodford-related liabilities.

It also confirmed it was in "advanced" discussions with the Financial Conduct Authority to settle the regulator’s investigation into LFS, which managed Neil Woodford’s £2.7bn WEIF until its collapse in June 2019.

Link will receive no net proceeds should the sale go ahead, however. It said: "The likely outcome of the sale to Waystone and of settlement with the FCA, if both are concluded, is that Link Group would receive no net proceeds of the sale."

It would also take a non-cash impairment charge of around A$449m (£258m) in the half year ending 31 December 2022, it added.

In a statement, the regulator said: "To assist a potential resolution, the FCA has provided time for Link Group to realise assets. We have previously set out that any redress figure would be based on our view of LFS’s failings in managing the liquidity of the WEIF."

Last year, the FCA said LFS could be liable for redress payments of up to £306m as well as a £50m fine.

A former star stock picker, Woodford restricted withdrawals after values started to plunge, leaving investors unable to access their money. The fund was finally closed in October 2019 and Woodford was widely criticised for holding illiquid assets, making it harder to meet redemption calls following months of underperformance.

The sale remains dependent on further due diligence by Waystone, which provides a range of services to the asset management industry, as well as a number of internal approvals.