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Strong maiden results for listed litigation funder

Moloney: Listing raised necessary capital

Australian litigation funder LCM – which listed in London late last year and brought a UK-based team on board – has announced strong half-year results.

Its shares jumped 18% to 80p on the news, having gone public in December [1] at 52p, raising £20m.

LCM delisted from the Australian exchange [2] to access the greater opportunities in London, and said it now has “significant capital” available to expand its portfolio, with eight projects at an advanced stage of due diligence.

For the second six months of 2018, LCM reported revenue from three completed investments of A$11.7m (£6.3m), with adjusted profit before tax of A$2.7m – compared to a loss of A$1.6m in the same period the previous year.

It doubled its investment in the period to A$13m – taking the figure to A$20m in all – and has A$53m of cash on its balance sheet.

LCM has a portfolio of 24 projects under management, three more than at the time of listing, of which 17 are unconditionally funded and seven “conditionally signed”.

LCM said it was in advanced negotiations and has term sheets issued with respect to a further eight projects.

It told investors: “Project and pipeline opportunities are well diversified by litigation type and geography, while maintaining a disciplined project selection. LCM has pre-qualified 64 pipeline projects with estimated investment of A$409m.”

These are made up of commercial litigation (27), international arbitration (17), corporate portfolio (eight), insolvency (six), class actions (five) and law firm funding (one).

LCM funded its first corporate portfolio transaction in October 2018, comprising both litigation and arbitral disputes relating to building and construction for an unnamed company.

It is this type of work that Nick Rowles-Davies, who is heading the London operation as executive vice-chairman, specialises in. He and five colleagues joined after LCM took over Chancery Capital. LCM also now has an office in Singapore.

Chief executive Patrick Moloney said: “The strength of our performance is reflective of the consistent approach and focus we have ensuring that we continue to deliver strong returns across our existing portfolio. We have significantly expanded our operations to create a truly global platform for LCM.

“Our listing on the London Stock Exchange was a key milestone for the company and raised necessary capital to help fund future litigation projects and investments.

“Since LCM has become a London-listed company, we have already seen a notable increase in the litigation funding products that we offer across the mix – including single case, portfolio and corporate transactions.”

LCM’s running internal rate of return is 78%, and return on invested capital 117%, which it said were “exceptional figures for the industry”.