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Fresh trouble for Neil Woodford as Benevolent AI valuation drops

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MUNICH, GERMANY - JUNE 29: Joanna Shields of Facebook speaks during the Digital Life Design women conference (DLDwomen) at Bavarian National Museum on June 29, 2011 in Munich, Germany. The conference features discussions, case studies and lectures and brings together an extraordinary group of international high-profile speakers and more than 500 participants from business, media, technology, society, health, education, politics and science. (Photo by Sascha Baumann/Getty Images)
Benevolent AI is led by former Facebook executive and government minister Baroness Shields

Beleaguered fund manager Neil Woodford could be facing fresh trouble as one of his biggest bets is reportedly braced to suffer a drop in its valuation.

London-based tech firm Benevolent AI is said to be raising money at a level well below its $2bn (£1.6bn) valuation, the Sunday Times reported.

Read more: Neil Woodford cuts staff numbers as fund suspension continues

Benevolent AI, which is led by former Facebook executive and government minister Baroness Joanna Shields, has held talks with a number of large Asian investors, including Singapore’s sovereign wealth fund Temasek, according to the report.

The drop in value would mark a fresh blow for Woodford, who has been trying to restore order to his flagship Equity Income fund since trading was suspended last month after investors withdrew billions of pounds.

The stockpicker has announced job cuts at Woodford Investment Management’s Oxford headquarters, and has said he will use the suspension to reduce the fund’s exposure to illiquid and unquoted stocks.

Woodford has attracted criticism due to his ailing fund’s exposure to private stocks such as Benevolent AI. The former star trader had breached the 10 per cent limit on private holdings in his Equity Income fund on several occasions, according to the report.

Woodford has apologised to investors, but defended his strategy of focusing on “undervalued assets”.

Benevolent AI uses artificial intelligence to discover and develop new medicines, and recently unveiled a partnership with British pharmaceutical giant Astrazeneca.

The tech firm raised $115m in a funding round in April and boasts membership of an exclusive club of so-called unicorn startups with a valuation of more than $1bn.

But Benevolent AI posted a hefty pre-tax loss of £33m last year on revenue of £6.8m, and the firm is reportedly at risk of losing its unicorn status after its next funding round.

The loss in valuation would be an unwelcome blow for Woodford as he looks to restore investor confidence. As of 31 May, Benevolent AI made up just over five per cent of the Equity Income fund, making it Woodford’s fourth largest holding.

Read more: Woodford sells shrimp shares on the stock floor

A spokesperson for Benevolent AI said: “On the back of its recent Astrazeneca deal and the continued commercialisation of its IP, Benevolent AI is well placed to do a further fundraising in due course.”

Woodford Investment Management declined to comment.