City of London Group plc (COLG) is looking to sell its 50% stake in third-party litigation funder Therium Capital Management, it announced yesterday.
Therium’s long-touted international joint venture, which would have been its largest fund, has also been scrapped.
COLG’s acting chief executive, John Kent, said that in line with its operational strategy of focusing on SME lending, it has decided “not to inject further development capital into Therium and, since the end of the financial year, has reached agreement with the management of Therium to initiate a process to identify an alternative partner”.
COLG is a financial services group focused on providing merchant banking services to finance the SME and professional services sectors.
The statement, contained in COLG’s preliminary announcement of its annual results, emphasised that “Therium remains a business with strong management, good growth prospects and an excellent position in the marketplace”.
Over the year to 31 March 2014, Therium has had four litigation cases resolved, winning two and losing one, with one case being withdrawn at a very early stage. These four cases have been relatively small, Mr Kent reported, and many of Therium’s larger cases are still ongoing.
Since the year end, he added, Therium has had four cases resolved in its favour and has lost one.
Therium reported a loss before tax of £600,000 for the financial year, compared to £700,000 in 2012/13.
Mr Kent continued: “Therium has experienced continued delays in relation to its proposed international joint venture, which was intended to provide the scale necessary to generate profits without reliance on performance fees.
“This joint venture will not proceed as negotiations have been terminated by the parties. Other fund raising activities had been curtailed during these discussions and have only recently been resumed.”
In the meantime Novitas, Therium’s 50% owned associate, which extends secured lending to law firms and their clients, has recorded a strong advance, increasing its loan book “substantially” over the year.
Mr Kent said: “The business is profitable and foresees continued growth with the introduction of new products.”