Bentham IMF announces new $500 million Fund for US commercial litigation finance investments, with upsize potential to $1 billion
NEW YORK, 30 November 2018: IMF Bentham Limited (ASX: IMF), the parent company of US-based Bentham IMF (Bentham), announces today the launch of a new fund focused on US litigation finance investments (Fund 4) with an initial size of US$500m. IMF has completed a first closing with US$375m of binding investor commitments (including US$100m from IMF) and expects a second closing of US$125m of external investor commitments to occur before the end of 2018. There is potential to increase the Fund to US$1 billion following the investment of the initial capital.
Whilst described as a “fund”, the structure comprises a series of managed accounts which will, together with IMF, make investments in U.S. litigation finance opportunities via jointly owned special purpose vehicles. The structure provides the potential to increase the size of the fund to US$1 billion if investors exercise the option to roll over into the second series, which will be on the same terms as the first series.
The investors in the first closing of Fund 4 comprise funds managed by and investors represented by Partners Capital, which is a leading outsourced investment office based in London, Boston, New York, Hong Kong and Singapore, managing over US$24 billion on behalf of endowments, foundations, investment professionals and family offices. IMF intends to fund its capital commitment to Fund 4 from its internal cash resources following the recent completion of an issue of equity and bonds, which raised approximately A$100m.
“Investor confidence in Bentham IMF and interest in the litigation finance asset class were the principal factors facilitating our ability to launch our second fund devoted solely to U.S. investments just 21 months after the launch of our first U.S.-focused fund” said Andrew Saker, IMF’s Managing Director and Chief Executive Officer. “This additional capital allows us to meet the continually growing demand for Bentham’s U.S. funding and to further execute IMF’s long-term growth plans,” he added.
IMF will direct all U.S. investment opportunities to Fund 4 and retain the right to re-invest capital from investments which complete during that time.
“Law firms and companies are increasingly seeking non-recourse litigation funding as a smart capital and risk management tool,” said Charlie Gollow, Bentham’s U.S. Chief Executive. “In the last three years, we’ve seen a 110% increase in qualified applications for funding in the U.S. and greater interest in larger deals. This $500m fund, combined with substantial growth slated for our investment team, positions us to continue to offer the resources needed to address market need and make larger investments,” he added.
“Our ability to rapidly vet investment opportunities and deploy capital, combined with our team of former litigators experienced in complex litigation and funding, has earned us the privilege of being a top-ranked, go-to funder in the increasingly competitive U.S. market,” said Allison Chock, Bentham IMF’s U.S. Chief Investment Officer. “This fund reinforces the fact that working with Bentham IMF affords partnership with one of the most successful and reliable funders in the business.”
Fund 4 marks the continued evolution of IMF’s business model following the establishment of Funds 1, 2 and 3. It also offers a reduction in risk via pro-rata return of capital and management fees being earned throughout on deployed capital and performance fees payable on each investment completion. IMF considers the adjusted risk return structure of Fund 4 to be the optimal model for the group moving forward and will be seeking to replicate this structure for its next Rest of the World fund, targeted for FY19 H2.
Additional information about Fund 4 can be found at ASX Announcement.