LCM boosts financial muscle as Burford announces “record year”

Moloney: Hugely significant development

Listed funder Litigation Capital Management (LCM) has secured further investment capital after agreeing a $50m (£36m) credit facility from Northleaf Capital Partners.

It told the stock exchange that the deal provided “significant additional capital flexibility to enable the company to grow its direct investment portfolio, its asset management business and to supplement balance sheet capital in relation to the co-funding opportunities of the LCM Global Alternative Returns Fund launched last year”.

The facility, which is secured against LCM’s assets, is available for general corporate purposes, and has an overall term of four years.

The coupon comprises a LIBOR based rate of 8% per annum together with a profit participation calculated by reference to the profitability of LCM’s direct investments. In all circumstances, the overall cost of the facility is capped at 13% per annum.

LCM chief executive Patrick Moloney said the credit facility was “a hugely significant development in LCM’s growth”, saying that, together with LCM’s existing resources, LCM had enough capital to meet its “most conservative assessment of the expected demand for LCM’s litigation finance needs”.

Chairman Jonathan Moulds added that LCM was witnessing “an uplift in litigation finance applications as a result of a number of factors, including the extraordinary uncertainty facing global economies”.

He said: “These conditions, combined with the flexibility the credit facility, provides LCM with an excellent opportunity to accelerate growth.”

Meanwhile, an update from Burford Capital described 2020 as “the best year in its history for portfolio performance”, generating a record $361m in realised gains.

Burford ended the year with its highest-ever levels of cash liquidity – cash on the balance sheet of $336m – and at $4.6bn, its portfolio of live matters was larger than it has ever been.

As a result, it is to recommend a resumption to paying a dividend – which was suspended in early 2020 due to uncertainty around Covid – at its previous annual level of 12.5 US cents per share.

Buford said it expected its 2020 income to be slightly down on 2019 at $345-355m, with profit before tax dipping a little to $240-250m, due in the main to “modestly higher general operating expenses consistent with Burford’s ongoing growth strategy” and expenses related to Burford’s New York Stock Exchange listing.

On Covid, the announcement said: “Burford’s business has been disrupted considerably less by the pandemic than might have been feared a year ago. To be sure, we saw slowdowns in new business during the first half of 2020, but then a rebound during the second half of the year…

“Doubtless we will see some elongation of the lives of some matters, but we have not seen any matters discontinue nor have any parties become insolvent.”

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