Litigation funder Burford Capital rules it's the best year ever as profit increases by 170 per cent

Lucy White
Christopher Bogart is chief executive of Burford Capital

Woodford-backed litigation funder Burford Capital has announced its best ever first-half results, as profit exceeded that in the whole of last year.

The numbers

The firm announced a 170 per cent increase in profit after tax to $142.7m (£108.6m), up from $52.8m in the first half of last year.

Meanwhile income increased by 130 per cent to $175.5 million, driven by a 148 per cent increase in investment income to $161.6 million.

“In just under eight years, Burford has grown from an £80m startup to become the clear industry leader. In six months, we have committed almost half a billion dollars to new investments," said the firm's chairman Sir Peter Middleton.

Read more: The rise and rise of litigation finance – and how private individuals can get in on the action

In this half, Burford captured record new commitments to investments of $488m – $226 million of which came from the firm's balance sheet and $262m from its investment funds. More than half of this has already been deployed.

It also introduced an oversubscribed retail bond offering, raising £175m at a five per cent coupon, to further support client demand and future growth

The acquisition of investment manager Gerchen Keller also added to Burford's success, as the first investment fund started to generate performance fees.

The new investment management business closed the largest investment fund ever raised in the sector, at $500m, to invest in complex strategies.

Burford announced an interim dividend of 3.05¢, an increase of 14 per cent over last year's. Share price was up 12.42 per cent at the time of writing at 1,159p.

Read more: Burford Capital share price closes up after financial services company reveals revenues over $100m for the first time in its history

The cases

Burford has also seen record investment performance underpinned by 11 investments.

Just last week it announced that a favourable decision has been made in the Teinver v. Argentina case, involving the expropriation of two Argentine airlines from their corporate owners.

The arbitration tribunal ruled that Argentina must pay damages of more than $324m plus interest, with Burford's entitlement expected to be in the range of $140m.

Earlier this year, the firm sold 25 per cent of its interest in the ongoing Petersen case for a total of $106m.

This helped the firm to generate cash of $173.7m from investments on its balance sheet, exceeding every previous half-year period.

Read more: Connection Capital raises £8m from private investors for Volkswagen and Lloyds Bank litigation funder Therium

What the analysts said

N+1 Singer noted that the Petersen announcement earlier this year meant expectations were high, and analysts were not disappointed.

N+1 increased this year's adjusted profit before tax by 69 per cent, with a smaller upgrade for 2018.

Numis revised its target share price to 1,200p from 950p, and said: "We continue to favour Burford as we believe it represents one of the most profitable and easiest means of accessing this rapidly growing industry."

On the Gerchen Keller deal, analysts at Macquarie said: "Burford has developed its distribution through new products and the acquisition of the fund management operations has enabled the group to access third-party capital for the new fund, which we see as a key advantage of the acquisition."

Related articles