Built on a Lie by Owen Walker

Author:Owen Walker [Walker, Owen]
Language: eng
Format: epub
ISBN: 9780241468227
Published: 2021-01-26T00:00:00+00:00

One of those involved in raising money for start-ups was Paul Pindar, the veteran chief executive of Capita, who had recently left the outsourcer. Having previously worked in private equity, Pindar was trying to establish a portfolio of chairmanships to see himself towards a lucrative retirement. He knew Woodford well, from the fund manager’s long history as a big investor in Capita. Pindar became a regular at Oxford Business Park, introducing new businesses to Woodford for him to invest in. One of the first was Purplebricks, a new online estate agency that tried to upend the property market by charging vendors a fixed fee of just £599 to help them sell their house. Pindar, who had already made a personal investment in the business, convinced Woodford to hand over £7 million from Equity Income for a 30 per cent stake in the company. Pindar would go on to join the Purplebricks board and become chairman. Another start-up he introduced Woodford to was online mattress maker Eve Sleep, of which Pindar was also made chairman. Both companies were hot internet ventures that attempted to disrupt traditional industries – exactly the sort of business Woodford had steered clear of during the dotcom boom. They both got off to a flying start, but within a couple of years of going public they struggled badly.

Woodford’s largesse when it came to doling out money to up-and-coming businesses began to create tension within the new office. While Woodford chose the investments, it was the job of his three investment analysts – Stephen and Paul Lamacraft plus Saku Saha – to carry out rigorous assessments of the companies and put them through their paces. Saha concentrated on private businesses. Once due diligence had been carried out, any private investments needed to be signed off by Gray Smith, the company’s head of legal and compliance. Smith became increasingly concerned by the volume of requests for unquoted investments coming through. He also had misgivings about how thoroughly the analysts were vetting them. This led to heated discussions between Smith and Woodford, who hated having his investment methods tampered with.

Tension came to a head over one company in particular. Evofem was a US bioscience business that made products for women’s sexual and reproductive health. Woodford had invested heavily in Evofem while at Invesco Perpetual and wanted to do so again. His former colleagues in Henley, who were less enamoured with the business, were only too happy to sell him the stake, but it would cost Woodford $250 million. Smith baulked at the price and asked to see what due diligence had been carried out. Dissatisfied by what the analysts presented, Smith went on to ask where the notes were from trips made to Evofem’s San Diego headquarters – but was shocked to discover no one had been to see the premises in person despite promising to commit $250 million of investors’ money to the business.

A row ensued between Woodford and his investment team, who believed the lawyer was needlessly meddling, and Smith, who dug his heels in.

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