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Litigation Capital Management expects more disputes work as insolvencies rise

Published: 03:16 22 Sep 2020 EDT

Litigation Capital Management PLC -

Litigation Capital Management Limited (LON:LIT), the disputes funding specialist, said its assets under management rose sharply over the past year while there was a significant increase in firms seeking a legal solution.

Coronavirus is likely to accelerate this trend, it added, with the likelihood of a substantial rise in insolvency-related litigation in all the jurisdictions where it operates.

In the year to end June 2020, Litigation Capital Management said it received 522 applications for funding, which was a 25% increase on the previous year, though only 3.5% of these received an investment.

The Australia-based company funds both portfolios and single cases and said there had been eight resolutions in the two corporate portfolios over the past year.

In March, Litigation Capital Management also launched a US$150m Global Alternative Returns Fund, which is now 61% committed.

Gross profit in the year to June increased by 7% to A$21.7mln, though profit before tax dropped to A$9.2m as coronavirus disruption delayed outcomes in three cases.

Total assets under management were US$250mln at end June but had since risen to U$304mln in September.

Cash receipts from the completion of litigation investments were A$30.7mln, up 14% on the prior year, though Litigation Capital Management said it will not pay a dividend as it wants to take maximum advantage of the growing pool of opportunities.

In the results statement, Patrick Moloney, Litigation Capital Management's chief executive said: "LCM has seen significant growth in demand for investment opportunities over the period, further increasing our market opportunity.  

"Our growth opportunity has also been further accelerated following the most significant development in the year; the establishment of LCM's asset management division.

“This allows us greater pools of capital to invest, in turn providing greater returns. It also enables us to expand our global footprint, and we are pleased to have seen increasing traction across all our regions, in particular in the EMEA region, with a strong performance from the London office.” 

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