IMF Bentham launches US$200 million funding vehicle

$US200 million investment vehicle announcment

On 13 February 2017 IMF announced one of the most significant deals for the company, with the launch of a US$200 million litigation investment funding vehicle ("the Fund").

This new funding vehicle will focus on the U.S market with the financing of U.S cases and investments.

The funding vehicle is the first of its type for IMF and sets a precedent for the establishment of similar vehicles by IMF in other markets, including Australia.

Overview of the funding vehicle

As a major enhancement to IMF's capital management, a large U.S. hedge fund will invest up to US$150 million in the Fund and IMF will invest up to US$50 million.

IMF is, at the present time, intending to fund its capital commitment to the Fund from its internal cash resources.

The Benefits

By leveraging its investments in the U.S, IMF is aiming to generate a return from the capital it invests in the funding vehicle that is far superior to the return it would expect to achieve by investing the same amount directly into litigation funding assets in the US.

The new capital structure will also benefit by:

  • de-risking IMF;
  • providing financial flexibility for the company in the future;
  • enabling the company to scale-up operations in the U.S and meet expected demand from the US market over the next three years; and
  • freeing up capital to use in jurisdictions, other than the U.S, including Australia, Asia and potentially for any re-entry into Europe.

IMF will continue to explore other opportunities to structure its capital management in similar ways in jurisdictions other than the US, including Australia and Asia, amongst others.

While the U.S has been the largest litigation market for many years, and IMF expects that to remain the case going forward, the company is very optimistic about opportunities for IMF in other markets.

IMF's global portfolio

IMF, through its U.S.-based subsidiary (Bentham IMF), has concluded 14 of the 45 investments it has made in the U.S. over the past six years, and achieved an average internal rate of return (IRR) of 83%, a multiple on invested capital (MOIC) of 1.18x, a success rate of 64% and an average investment period of 1.4 years.

IMF, on a global basis, has commenced and completed 187 matters since inception in 2001, which have produced a MOIC of 1.55x, a success rate of 90% and an average investment period of 2.4 years.