Burford Capital has raised $360m (£274m) for a new private investment fund which will focus on ‘lower risk, lower return pre-settlement litigation investments’, the listed litigation funder announced today.

The Burford Advantage Master Fund will target investments expected to produce an internal rate of return of between 12% and 20% as the company seeks to answer ‘unmet demand’ for medium-risk litigation funding. Institutional investors have committed $300m with Burford committing a further $60m.

The company said the new fund ‘fills the gap between the Burford Alternative Income Fund, which focuses on lower return post-settlement investments, and Burford’s core business’.

‘The Advantage Fund has a structure that rewards Burford more than traditional fund models for producing good performance,’ it added. ‘The fund does not have a traditional management and performance fee structure, but instead provides the first 10% of annual simple returns to the fund investors while Burford retains any excess return.’

Chris Bogart

Bogart: 'Burford is still scratching the surface of the legal finance market'

Source: Burford Capital

Burford said it ‘does better with this approach than a traditional “2 and 20” fee structure once its returns exceed approximately 13%’. It added that if the new fund produces ‘super-normal returns for this level of risk, which is not expected, a level of sharing with fund investors would kick in’.

Chief executive Christopher Bogart said: ‘Burford is still scratching the surface of the legal finance market. As we continue to respond to our clients’ needs, we have found unmet demand for products in the middle range where litigation risk remains but where the risk is anticipated to be lower for structural or other reasons. In response to this demand, we have created the Advantage Fund to match client demand with institutional investors seeking exposure to the uncorrelated cash flows of legal finance at a lower risk of loss with commensurate returns.’

Shares in Burford Capital were marginally up to 745.5p following today’s announcement, which comes ahead of tomorrow's publication of Burford’s results for the year to December 31 2021.

The results are expected to report a net loss of $70m-$80m (£53m-£61m) for 2021, which Burford has blamed in part on ‘slow case progress’ arising from court delays caused by the pandemic.

 

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