The owner of a 50% stake in third-party funder Therium Capital Management has announced that it has reached agreement with an as-yet unnamed buyer to sell its interest.
AIM-listed City of London Group plc (COLG) first revealed its intention to divest itself of Therium last summer and told the stock market yesterday that its interest will be sold for a total consideration of £3.4m, of which £1.7m is payable in cash on completion with the balance being deferred.
The deferred consideration will be repaid two years from completion or earlier from performance fees or incremental management fees and it will be guaranteed by Therium’s new partner. A further contingent payment will be earned if performance fees exceed a certain level.
COLG said it will use the cash proceeds to repay debt.
“Completion of the sale is expected to follow shortly when certain conditions to completion have been satisfied. A further announcement will be made at that time,” it added.
COLG has one remaining direct investment of £412,000 in a litigation case. But it reported that following a “material adverse change in the merits of this case”, a decision has been taken not to pursue it further, “and on this basis the company will provide in full for its investment”.
COLG retains investments of around £200,000 in LLPs which provide exposure to portfolios of litigation cases managed by Therium.
In December, COLG reported that Therium generated a return of double the investment on cases closed in the first six months of its financial year.
In the six months to 30 September 2014 Therium has had four cases resolved, winning three and settling one with a partial loss. Therium’s investors put £4.5m into these cases, which generated a return of £8.8m.
Therium’s profit before tax for the period was £304,000 – as against a loss of £240,000 in the first half of 2013/14.
Further, in August 2014, Therium was appointed as litigation advisor to a newly established fund of €7m.