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Mitchell Fraser-Jones 24 March 2015 Est. reading: 2 min read

The Woodford Patient Capital Trust may invest approximately 75% of its assets in early-stage and early-growth businesses. While early-stage businesses are typically pre-revenue, with significant milestones still to reach in order to fulfil their potential, early-growth businesses have overcome some of these earlier challenges and will be starting to penetrate a clearly identified market opportunity. Gigaclear is a good case study of a company at this stage of its development.

Gigaclear is an unquoted business, founded in 2010 by Matthew Hare, Chief Executive. It builds and operates broadband networks to rural communities where larger scale telecoms businesses have underinvested. Rather than operating a ‘build it and they will come’ business model, Gigaclear identifies communities where there is strong demand for reliable, ultrafast broadband and customers have pre-committed to cover 10% of the company’s capital expenditure before any capital is deployed.

Once the network is built out, penetration rates accelerate and, on the 25 rural villages in the UK already benefiting from a Gigaclear broadband network, the company sees penetration rates of between 26% and 65% of all households using the service. Penetration rates continue to rise in all 25 villages and the company is currently building networks in a further 50 villages.

Gigaclear is growing rapidly and aims to pass 20,000 premises by the end of 2015, growing to 200,000 in 2018. This is an excellent example of a great business model being executed by a talented management team that knows its industry intimately and, although it is capital intensive, the long-term returns on that capital should be very attractive.

Find out more about the businesses we’re investing our patience and capital in

Gigaclear is currently held by the CF Woodford Equity Income Fund. The purpose of this case study is to illustrate the type of business in which the Woodford Patient Capital Trust plc may invest. It should not be assumed that the Woodford Patient Capital Trust plc will actually invest in this company. Investment in companies such as Gigaclear presents risks whereby the value of the Trust (or Fund) can go down as well as up and this may include permanent capital loss.

What are the risks?

  • The value of investments and any income from them may go down as well as up, so you may get back less than you invested
  • Past performance cannot be relied upon as a guide to future performance
  • The ongoing charges figure is charged to capital, so the income of the funds may be higher but capital growth may be restricted or capital may be eroded
  • The funds may invest in other transferable securities, money market instruments, warrants, collective investment schemes and deposits – some of these security types could increase the funds’ volatility and increase the level of indirect charges to which the funds are exposed
  • The funds and trust may invest in overseas securities and be exposed to currencies other than pound sterling – as a result, exchange rate movements may cause the sterling value of these investments and the income from them, to fluctuate
  • The LF Woodford Income Focus Fund will be invested in a concentrated portfolio of securities – the fund is not restricted by reference to any geographical region, sector or market capitalisation
  • The LF Woodford Equity Income Fund and the Woodford Patient Capital Trust may invest in unquoted securities, which may be less liquid and more difficult to value, because they are generally not publicly traded – the lack of an open market may also make it more difficult to establish fair value
  • The price of shares in the Woodford Patient Capital Trust is determined by market supply and demand, and this may be different to the net asset value of the trust. This means the price may be volatile in response to changes in demand
  • Long-term outcomes are more binary – extremely attractive rewards for success but some businesses will inevitably fail to fulfil their potential and this may expose investors to the risk of capital losses
  • Young businesses have a different risk profile to mature blue-chip companies – risks are much more stock-specific, which implies a lower correlation with equity markets and the wider economy – it can take years for young businesses to fulfil their potential, this investment requires patience

Important information

Before investing, you should read the Key Investor Information Document (KIID) for the fund – or Key Information Document (KID) for the trust – and the Prospectus which, along with our terms and conditions, can be obtained from the downloads page or from our registered office. If you have a financial adviser, you should seek their advice before investing. Woodford Investment Management Ltd is not authorised to provide investment advice.

The Woodford Patient Capital Trust currently intends to conduct its affairs so that its securities can be recommended by IFAs to ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The securities are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an investment trust.

The Woodford Funds (Ireland) ICAV (the “Fund”) has appointed as Swiss Representative Oligo Swiss Fund Services SA, Av. Villamont 17, 1005 Lausanne, Switzerland. The Fund’s Swiss paying agent is Neue Helvetische Bank AG. All fund documentation including, Prospectus, Key Investor Information Documents, Instrument of Incorporation and financial reports may be obtained free of charge from the Swiss Representative in Lausanne. The place of performance and jurisdiction for all shares distributed in or from Switzerland is at the registered office of the Swiss Representative. Fund prices can be found at www.fundinfo.com.

 

Woodford Investment Management Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 745433). Incorporated in England and Wales, company number 10118169. Registered address 9400 Garsington Road, Oxford OX4 2HN.

Woodford Patient Capital Trust plc is incorporated in England and Wales, company number 09405653. Registered as an investment company under section 833 of the Companies Act 2006. Registered address Beaufort House, 51 New North Road, Exeter, EX4 4EP.

© 2019 Woodford Investment Management Ltd.
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