Bentham Launches Second US-Focused Litigation Finance Vehicle as Capital Grows
For litigation funders, money keeps coming in the door. But can they put it to use?
November 30, 2018 at 02:10 PM
2 minute read
For litigation financiers, the money just keeps coming in the door.
Australia-based IMF Bentham Ltd. announced Thursday its U.S. arm had raised $275 million from outside investors, with the expectation that it will raise a further $125 million by the end of the year. By adding $100 million of the company's own money, Bentham expects a $500 million investment vehicle will satisfy its capital needs for the U.S. market for the next four years, said Allison Chock, the company's U.S. chief investment officer.
The broader litigation finance community has now raised more than $2 billion since the end of 2016, according to reporting from The American Lawyer. Burford Capital Ltd. in October raised $250 million in a stock sale, and said at the time that it plans to “shortly” issue debt and raise a new private fund.
Chock said the money was needed, as Bentham's first U.S.-based fund, closed in February last year, has committed about 98 percent of its capital. That deal involved a $100 million upfront investment from the hedge fund Fortress Capital alongside an initial $33 million investment from IMF Bentham itself.
For the year ending June 30, Bentham said it had made $321 million worth of investments, up from $191 million the year prior.
The latest fund raised by Bentham is primarily backed by Partners Capital, which manages $24 billion in assets, IMF Bentham said. It also includes a provision that could allow the total investment in the fund to grow to $1 billion, Bentham said.
With all the money coming in, litigation funders will be under increased pressure to find cases worth investing in.
Bentham said in a statement it has seen a 110 percent rise in “qualified applications” for U.S.-based investment opportunities, or cases worth considering as investments, over the last three years. Chock said large law firms are increasingly seeing litigation finance as a way to provide clients more flexible fee arrangements than simply the billable hour.
“The larger firms are starting to key into why this may actually help them survive in the long-run,” Chock said.
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