x Abu Dhabi, UAE Thursday 20 July 2017

Lawsuit financiers' funds increase

Aside from the legal entities generating high-cost litigation fees from the ongoing Al Gosaibi-Al Sanea saga, other companies have been making hay as the sun shines on the sector.

Aside from the legal entities generating high-cost litigation fees from the ongoing Al Gosaibi-Al Sanea saga, other companies have been making hay as the sun shines on the sector.

Burford Capital, a London-listed fund that finances lawsuits in return for a cut of any payouts, said profit doubled last year as several of the cases it invested in came good.

The company, which competes with Juridica in the United States and Britain, plans to raise its dividend for shareholders by one third reflecting a strong outlook.

"We're obviously feeling very positive about the results, about the business and the industry as a whole," the Burford chief executive Christopher Bogart said last week.

Pretax profit excluding the impact of an acquisition, jumped to US$34.1m (Dh124.8m) from $16m a year earlier. The company plans to raise its dividend to 4.76 cents per share from 3.66 cents the previous year.

Burford's shares have climbed almost 14 per cent so far this year.

The company, which has $300m under management, said 12 litigations finished last year, generating $47m in gross investment recoveries, a return of 61 per cent. That was more than the previous two years combined.

It said it has a further $53m in gross payouts pending and a strong pipeline of nine legal cases that it has committed $72m to.

"We believe that both the deployment and investment recoveries should continue to grow strongly in 2013 and beyond," RBC Capital Markets analysts said in a note to clients.

Burford declined to name its clients or the cases it is funding, citing legal reasons.

The company entered the UK market last year after acquiring Firstassist for $18.75m on a cash-free, debt-free basis.

Mr Bogart said in its first 10 months, Firstassist, now called Burford UK, has generated $11m in profit before tax.

Juridica, a British firm based in Guernsey, also revealed a significant rise in annual profits for last year as case activity grew.

The company said last month total cash profit from case activity rocketed 195 per cent to $38.1m, compared with $12.9m a year earlier, according to YahooFinance.

Total comprehensive income attributable to equity owners increased 14 pr cent to $37.6m from $32.9m, while gross cash proceeds came to $38.4m, up 125 per cent from $17.1m in 2011.

Juridica, whose clients include Fortune 1000 companies, FT Global 500 businesses, inventors, universities, and the leading law firms that represent them, said an increase in return on its investments in cases drove results.

"The company saw significant activity in several of its investments, including final settlement of two cases, partial settlement of several cases with multiple defendants, four successful verdicts, and two judgements that were favourably affirmed on appeals," YahooFinance quoted it as saying.

The group expects to see activity increase in its portfolio over the next year, based on the confirmation of trial dates and final case decisions, the website added.

* with agencies