Frozen Woodford fund breaches 10% cap on unlisted holdings

Neil Woodford's suspended equity income fund has inadvertently breached a 10% cap on unlisted stocks after two of its holdings delisted their shares from Guernsey's exchange, a Woodford spokesman said on Wednesday.

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LONDON, July 31 (Reuters) - Neil Woodford's suspended equity income fund has inadvertently breached a 10% cap on unlisted stocks after two of its holdings delisted their shares from Guernsey's exchange, a Woodford spokesman said on Wednesday.

Woodford froze the 3.7 billion pound ($4.50 billion) flagship fund on June 3 because it could not meet redemption requests. The fund will likely stay shut until early December, its administrator said this week.

The fund has come under criticism from Britain's markets watchdog for "sailing close to the wind" with its heavy investment in illiquid stocks, including companies listed on the Guernsey exchange but not traded.

IH Holdings and BenevolentAI issued statements late on Tuesday via the TISE exchange saying they were cancelling their shares.

"Following the inadvertent passive breach, action to bring the fund back into compliance is already underway," the Woodford spokesman said in an emailed statement.

"The decision by Benevolent AI and Industrial Heat to delist from TISE will have no impact in how the assets are managed within the fund."

The fund has two other Guernsey-listed holdings, Sabina Estates and Ombu.

($1 = 0.8218 pounds)

(Reporting by Carolyn Cohn and Simon Jessop, editing by Huw Jones)

((carolyn.cohn@thomsonreuters.com; 44 207 542 6320; Reuters Messaging: carolyn.cohn.thomsonreuters.com@reuters.net))

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