Church of England fears £9m loss from sale of Wonga stake

http://www.theguardian.com/world/2014/may/23/church-of-england-wonga-sale-stake-archbishop

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The Church of England has admitted it is struggling to sell its investment in Wonga because it could lose up to £9m in a disposal.

The admission comes almost a year after Justin Welby, the archbishop of Canterbury, pledged to sell the Church's indirect holding in the payday lender, which he said "destroyed" lives.

The Church, which last summer promised to "compete Wonga out of existence" but was a day later revealed to be an investor, said on Friday that it may not be able to sell its stake for "some considerable time".

The Church Commissioners, which manages £6.1bn of church assets, said in its annual report that it "would like to remove our small investment exposure to Wonga". But they said selling it was proving much harder than anticipated because it is held through an investment in a fund managed by US venture capital firm Accel Partners.

A Church Commissioners spokesman said: "The only way to 'sell Wonga' is to sell the whole package. This cannot be done on the open market and buyers would demand a significant discount on the value of the investment. Consequently the Church Commissioners estimate they could lose £3m-£9m."

Welby, who said he was "very embarrassed" about the revelation of the Church's investment, had asked the Commissioners to sell the stake last summer.

The Church, which adheres to a strict ethical investment policy that dictates all investments should be in line with Christian values, banned itself from directly investing in payday lenders in 2001. Welby said church leaders had not been made aware that the Accel fund investment included a stake in Wonga, which charges interest at 5,853% APR, and were very surprised by the holding.

"They shouldn't be investing in Wonga; we don't think that's a good thing," he said last July. "What's clear is that … this is an embarrassment. We think that the payday lenders charge vastly excessive amounts for the loans they make, that there is a totally inadequate range of choice for consumers in deprived areas."

The Commissioners said they were reviewing the use of pooled funds in which it has no control over individual investments. "However, we cannot achieve – and do not seek to achieve – a 'perfectly ethical' portfolio," the Commissioners said. "Our approach is not to disengaged from the world of investment and business in which we live; we engage with it."

Medical research charity the Wellcome Trust, which was also revealed as an investor in Wonga last July, sold all its multimillion pound stake within weeks.

The Commissioners fund, which invests mostly in UK companies and property, achieved returns of 15.9% last year far outstripping the average 1% returns of UK mixed investment funds, according to Trustnet.

The fund is banned from investing in arms, tobacco, gambling, pornography and human cloning. Its biggest corporate holdings were in Royal Dutch Shell, Vodafone, HSBC, BP and GlaxoSmithKline.