Sovereign Wealth Fund Bets on Litigation Finance in $667M Burford Deal
"Burford has reached the level, if you will, of the highest form of institutional capital on the planet,” said CEO Christopher Bogart.
December 19, 2018 at 03:06 PM
3 minute read
Burford Capital LLC is getting some serious money from a serious source.
The litigation finance firm Wednesday said it had secured a commitment of up to $667 million from an undisclosed sovereign wealth fund. The publicly traded company also said it had raised $300 million from more traditional investors for a new litigation finance fund.
Burford CEO Christopher Bogart said the money, combined with more than $630 million from the firm's own balance sheet, solidifies the company's long-term capital needs and also proves that some of the world's most sophisticated investors are buying into the idea of betting on lawsuits.
“They have not historically been in the litigation finance market,” Bogart said of sovereign wealth funds. “What Burford obviously presents to them is the opportunity to invest at scale, which is important to them. And [it provides] the opportunity to invest with a firm that has the kind of process quality and governance that those kinds of investors demand. Burford has reached the level, if you will, of the highest form of institutional capital on the planet.”
Burford declined to identify what country was behind the new investment.
The fundraising comes on the heels of Burford issuing $250 million of equity in early October. The company's share price had fallen nearly 20 percent since that equity issue, which Bogart attributed to broader market weakness and volatility from uncertain Brexit negotiations. The news Wednesday sent the shares up more than 18 percent as of midday.
So far, Burford has been able to increase its investments as its capital piles up.
Burford announced in July that it had invested $540 million in new legal finance commitments during the first six months of the year. That was up 10 percent from the same time period last year and 170 percent more than the same period in 2016. Still, the industry is fighting to convince general counsels that funding can be a prominent and potentially profitable part of a legal department.
Burford has also been raising money more frequently since it purchased one of its largest competitors, Chicago-based Gerchen Keller Capital LLC, for $160 million in late 2016. Last year, Burford raised $500 million for a private fund and another £175 million in a bond issue.
This month, competitor IMF Bentham Ltd. closed a financing round of $400 million from outside investors.
The broader litigation finance market has now raised roughly $3 billion worth of investments or commitments since the end of 2016.
“This is a whole new era for litigation finance in just the sheer scale of the capital we have available and the demand we're seeing,” Bogart said. “And it now gives us long-term, reliable capital for us to meet virtually any investment need that we see.”
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