Burford Capital, the litigation funding firm backed by Neil Woodford and Invesco's Mark Barnett, has sold participation interests in one of its cases for $66m (£52m).
Burford uses investor capital to cover legal costs, and in return takes a scoop of any sums rewarded at the end of the lawsuit. It may, as in this case, sell participations in its investment on the secondary market.
The sale of the 15 per cent stake, which relates to the Petersen case against the Argentinian government, implies a total value for Burford's economic entitlement from the case of $440m.
Having invested around $18m so far in the case, the latest deal already makes the Petersen case the firm's best ever single investment return. As analysts at Liberum noted, it is currently delivering a 489 per cent return on invested capital.
Burford still owns 75 per cent of the entitlement from the case, and will retain a majority. It has currently sold 25 per cent, for a total of $106m.
The case originated when investment firm Petersen took a stake in Argentinian oil firm YPF. The government decided to nationalise the business, effectively seizing the ownership, which Petersen alleges pushed the firm into bankruptcy.
The Petersen lawsuit is currently stuck on a jurisdictional issue, over whether it will be tried in New York or through international arbitration, as Argentina is arguing.
Burford has said it will not drop its stake in the case below 65 per cent until 2019, and will not make further sales below a claim value of $600m.
Although analysts at Numis noted that “the twists and turns of a legal case can materially alter the prospect and scale of a victory”, they seemed impressed by the news, saying that “we expect to increase our forecasts and valuation”.