Listed litigation funder Burford Capital is to acquire a fellow investor, bringing together what it claims are the two largest legal financiers in the world. Burford will pay an initial £126m for GKC Holdings, the parent of Chicago-based Gerchen Keller Capital, with a further £12m in performance-related share consideration.
In an announcement to the London stock exchange today, Burford said the deal will bring together the ‘two largest finance players in the world’: between them they have committed almost £1.6bn to investments since their inceptions.
GKC, an investment manager registered as an investment adviser with the Securities and Exchange Commission, has around £1.2bn in assets under management in private investment vehicles, raised from public pensions, financial institutions, university endowments, foundations and family offices.
The enlarged business will have more than 80 staff, including 40 lawyers, with the GKC team joining Burford and GKC’s principals taking on senior roles in the combined business.
The combined businesses have estimated income of more than £12m this calendar year, of which around £7.2m will be operating profit.
Burford said the deal would also yield economies benefits of scale.
The company said: ‘In litigation finance, scale is important for portfolio diversification, market coverage and a deep bench. The scale and resources of the combined firm are expected to provide expanded geographic coverage in the US and globally, resulting in increased capital deployment for both public and private investors.’
Burford chief executive Christopher Bogart (pictured) said: ‘We know each other well and we approach the legal market in similar ways. The opportunity to combine the largest public player and the largest private capital manager is unique and will create the clear leader in this rapidly growing and evolving industry.’
Burford has already moved beyond the funder’s traditional role of investing in individual cases to funding ‘books’ of litigation. In October 2015 it agreed to provide £30m to claimant firm Hausfeld to finance German competition claims, enabling the law firm to establish an office in Berlin. It was granted an alternative business structure licence in January this year.