Top third-party funder Burford Capital has continued to lay off the risk of a massive investment, with its latest deal meaning that it has now sold off 25% of its entitlement to the proceeds of the case
It sold off 15% yesterday for $66m (£52m), implying a total value for its investment of $440m.
Earlier this year Burford sold off 10% for $40m, indicating that the value of the claim is rising.
It followed the company’s announcement last July that it was looking to create a secondary market in funding.
The AIM-listed funder told the stock exchange today that “despite Burford’s enthusiasm for the Petersen claims, there is significant risk in all litigation and Burford regards these sales as prudent risk and balance sheet management transactions”.
The Petersen claims relate to the 2012 expropriation by Argentina of a majority interest in YPF, the New York Stock Exchange-listed energy company formerly owned by Spain’s Repsol.
At the time of the expropriation, Repsol owned more than 50% of YPF and the Petersen Group owned 25%. After suing, Repsol ultimately settled its claims and received a payment of approximately $5bn from Argentina and YPF.
Burford has been appointed under the authority of the Spanish bankruptcy courts to provide financing to the liquidators of the Petersen Group, which went bankrupt after the expropriation. The liquidators are bringing claims against both YPF and Argentina, who earlier this year largely failed in their attempt to dismiss the claim. That decision of the Southern District of New York in the US is now on appeal.
Burford is entitled to 70% of the recovery in the Petersen matter, although expenses it would have to pay from that would be expected to reduce Burford’s recovery to something below 60%.
Burford said today that it has agreed not to sell any more of its 75% stake in the claim at an implied value of less than $600m and that it would not reduce its holding below 65% until after 31 December 2018 and will permanently hold at least 50.1%.
Meanwhile, Burford has today named well-known silk Tim Dutton QC as a non-executive director of its UK business and chair of its investment committee.
A former chair of the Bar Council and head of Fountain Court chambers, Mr Dutton is particularly well known for his disciplinary work, often acting for the Solicitors Regulation Authority – including in the failed high-profile prosecution of Leigh Day and three of its lawyers.
Craig Arnott, managing director of Burford Capital in London, said: “We’re honored to be joined by Tim, whose stature in London’s legal community speaks volumes to the ongoing maturation of the field.”