Tuesday, July 15, 2014

News: Woodford includes Xeros in new portfolio

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Neil Woodford, one of the most respected fund managers in the UK, has included Rotherham high-tech firm, Xeros, in his recently launched, £1.7 billion investment fund.

Based on the Advanced Manufacturing Park (AMP), Xeros is a Leeds University spin-out that has developed a patented system using a unique method of special polymer beads rather than the usual large amounts of fresh water to clean clothes.

In March, shares in Xeros began trading on the AIM on the London Stock Exchange (pictured). The share placing enabled the firm to raise £30m that is expected to allow the group to accelerate roll-out in commercial laundry and to fund the research and development process through to commercialisation in other identified applications, not least in domestic laundry.

Woodford announced he was leaving Invesco Perpetual in October 2013 to set up his own fund management business. Investors followed, based on his track record of success, and the CF Woodford Equity Income fund is now worth £1.7 billion.

The fund has taken the unusual step of publishing the finer details of its portfolio, and whilst the major percentages of the fund have been invested in leading names such as AstraZeneca, British American Tobacco and Rolls-Royce, Rotherham-based Xeros has secured 0.07% of the fund.

In addition to the investment and kudos, the approach of the active investors of buying stakes in businesses and helping them to fulfil their long-term potential could prove beneficial to Xeros.

In its unaudited interim results for the six months ended January 31, Xeros reported a loss before tax of £2.78m, an increase from the £1.36m loss in the first half of 2013. Revenue for the period was £86,195, compared to £41,698 in 2013. Xeros said that this was due to the continuing investment in research and development and the early stage commercialisation of the commercial laundry offering.

Woodford previously invested in Xeros whilst managing the Invesco Perpetual High Income Fund and the Invesco Perpetual Income Fund. The company's IP Group, a UK intellectual property commercialisation company, held 18.6% of the shares when they began trading on the stock exchange.

Neil Woodford, head of investment at Woodford Investment Management, said: "The UK has some of the best universities in the world, developing some of the best intellectual property. Unfortunately, as an economy, we have not had a good track record of converting these great ideas into long-term commercial success. There are many reasons for this but the principle one, in my view, is a distinct lack of appropriate capital.

"Early-stage technology companies need nurturing – they need patient, long-term capital in order to fulfil their long-term potential.

"I strongly believe that investing in early-stage technology businesses can add meaningfully to the long-term performance of the fund, albeit individual positions will be very small in the context of the overall portfolio and, in aggregate, they will be a relatively small part of the fund."

Xeros website
Woodford Funds website

Images: London Stock Exchange / Xeros

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