Tag Archives: Burford Capital

Burford Capital seventh consecutive year of double-digit growth

Burford Capital reported at 75% increase in net profits in 2016.

Buford is known as the world’s largest litigation financing company. This is now the funder’s seventh consecutive year of double digit growth. Buford’s total income rose 59%, from $103 million in 2015 to $163.4 million in 2016.

Buford had record investment recoveries of $216 million, up from $146 million in 2015. The increase was driven by a 60% lift in litigation investment income. The funding giant’s growth is indicative of the growing and evolving industry of litigation funding.

Read more news about Burford Capital here

Summarized by Jonathan Smith

Read full article at lse.co.uk

Burford To Recover $50 Million From Rennert Judgment

Burford Capital (LSE:BUR) buys Gerchen Keller Capital for USD $160 MillionThe Second Circuit Court of Appeals sustained a $213 million judgment against Ira Rennert relating to the bankruptcy of his company Magnesium Corp. of America. While the appeal was pending last year, the trustee auctioned off part of the judgment.

Gerchen Keller and Burford Capital

Gerchen Keller won the auction, paying $26.2 million for the right to the first $50 million of recovery. Burford has since acquired Gerchen Keller for $175 million last December. Burford will now be able to recover as the Second Circuit affirmed the 2015 jury verdict against Rennert. The jury found Ira fraudulently conveyed $100 million from Magnesium Corp. prior to bankruptcy proceedings initiated in 2001.

Rennert is now liable for that amount plus interest in order to repay Magnesium Corp.’s creditors.

Read full article at Forbes.com

Reviewed by Marc Lesnick.

UK Litigation Funders Assets Rise 25 Percent Last Year

Recent research revealed the assets of the top 20 UK litigation funders rose 25 percent last year alone.

Their balance sheets totaled £723 last year, up from £575 in 2015. This also represents a 55 percent increase since 2011. The increase coincides with Burford Capital’s recent acquisition of Gerchen Keller Capital, which will total its combine assets at $1.2 billion.

The release of these numbers highlights just how fast the litigation funding industry is growing and becoming recognized as a lucrative investment opportunity.

View full post at SolicitorsJournal

Summarized by Matthew Dunes

Financing Agreements Disclosure is required by Northern District of California in All Class Action Suits

Third-party litigation financing agreements are now required to be automatically disclosed in all proposed class actions in the Northern District of California. The automatic disclosure rule is the first of its kinds in the United States district courts.

The new rule, which states that “in any proposed class, collective or representative action, the required disclosure includes any person or entity that is funding the prosecution of any claim or counterclaim,” was adopted in a court-wide standing order for all judges in the Northern District of California. Although this is a huge step toward greater transparency in third party financing, the rule is unlikely to impact big players in litigation financing like Burford Capital and Bentham IMF, as they do not typically fund class action cases.

A Burford statement indicated that the new rule may even allow courts to see how common litigation financing in class action lawsuits has become.  The new rule is indeed limited—it was adopted after the court previously proposed an even broad requirement of automatic disclosure in all cases.

View full post at TheRecorder

Summarized by Meghan Hallinan

Burford Capital buys Gerchen for USD $160 Million

Burford Capital (LSE:BUR) buys Gerchen Keller Capital for USD $160 MillionOn December 14, litigation funding giant Burford Capital (LON: BUR) announced they were finalized the purchase of Gerchen Keller Capital (GKC) for USD $160 million in cash, shares and loan notes.  GKC also has an incentive to receive an additional $15 million based on performance.

Burford stock price saw a one day 18% rise in price from £480 GBP to £565 GPB per share.   Burford did add an additional ~3.7 million shares onto the LSE (GBP £1.7 Billion / USD $2.2 Billion in value)

Unlike most other companies that issue a single page press release, Burford’s release was a 10 page detailed document filled with facts,  business strategy, financials, and justified their purchase with 3 main reasons.

  • They view market demand for litigation finance having a voracious apetite, rising substantially.  Burford saw a limitation of its ability to scale further.
  • They required investment management arm, which GKC had.
  • GKC specialized in Intellectual Property, an area where Burford was lacking.

Burford Capital now claims to have over USD $1.2 Billion in current investments.  The company now has 86 employees, 40 of which are attorneys.   GKC had 20 employees.

The sale is about 10X earnings, with GKC reporting income of USD $15.4 million for the year of 2016.  Their profit margin ran at about 60%.  About USD $95 million of the $160 Million sale was cash. GKC’s principles remain at the company for the next 3 years.  Adam Gerchen is now the President at Burford.

GKC also has 4 active funds they use for investment.  They charge fees for those funds.  Revenue from those fees range from 1.4% to 20%, depending on the structure.

Burford Capital’s acquisition illustrates an industry with strong market growth and high profit margins.  The purchase also sets expectations among the industry for a 10X earnings valuation of existing litigation finance firms that show high profit margins.

Original Press Release: (PDF)

Summarized by Marc Lesnick