- Litigation Futures - https://www.litigationfutures.com -

Insolvency funder gobbles up new cases

Cooklin: Plenty of growth room

Manolete Partners, the litigation funder specialising in insolvency, has invested in more cases in the first six months of its current financial year than in the whole of the previous 12 months, its interim results showed today.

Chief executive Steven Cooklin told Litigation Futures that the company was continuing to capitalise on the higher profile provided by listing in December 2018.

Manolete is unusual compared to other litigation funders, most notably in that it acquires 90% of its cases [1] from insolvency practitioners, as opposed to simply funding them.

This allows the company to run the cases how it wants, and Manolete only takes its share after all the costs and creditors are paid.

In the six months to 30 September, Manolete invested in 65 new cases, compared to 31 in the same period last year and 61 for the entire 2019 financial year.

There were 18 cases settled during the six months – Manolete has only gone to trial in 11 cases (3%) in its history – with case settlement values of between £10,000 and £700,000, and an average of £135,556.

The money multiple has averaged 2.9x, with a return on capital employed of 193% on average. Cases last an average of just 11 months – far lower than other funders.

This all meant that revenue rose 15% to £7.5m, while profit before tax jumped 42% to £4.3m. Investment in cases was up 83% to £25.4m, and Manolete has an unused £20m HSBC revolving credit facility available.

Mr Cooklin said Manolete had the capacity to keep growing rapidly – it now has 10 in-house lawyers around the country who could each handle 30-35 cases at any one time.

At 30 September, Manolete was running 131 live cases (a 72% increase year on year), a number which had already risen to 144 by 7 November.

Mr Cooklin expressed confidence that Manolete would dominate the insolvency funding market, saying he would be disappointed if, in five years, the company had only a 30% share of it; there are estimated to be 2,300 insolvency claims each year in the UK, generating cash recoveries of £500m.

His report to investors said: “With the strong capital position following the IPO and the extension of our facility with HSBC we have moved up the value chain in a measured manner, and accept a larger proportion of higher return, higher value case investments.”

Manolete’s share price dipped 9% today to 465p. It listed at 175p, hitting a high of 590p in early May.