More machinations in the increasingly fluid third-party litigation funding market were highlighted earlier this week as one of the biggest players has flogged a part of its business to itself.
IMF Bentham – the Australian stock market-listed funder – announced that it had “sold” the majority of its US cases to its own American fund for nearly $60 million. In effect, the company has performed an internal manoeuvre that its says has reduced “the risk in its US portfolio and converts intangible assets to cash, enabling the cash to be deployed elsewhere”.
According to the company’s chief executive, Andrew Saker, the move means that IMF Bentham will “upsize the US Fund from $133million to $166.3 million”. The company says that it is transferring its rights in the majority of its investments in its US investment portfolio to its wholly-owned US subsidiary.
The deal means that the head office in Australia will transfer to its US fund its own US assets for a fee of $57.4 million, of which IMF will have contributed $9.6 million as its contribution. The Australian mother ship will be entitled to 85 per cent of the profits of those transferred investments “after paying preferred dividends and other expenses of the fund”. Bentham will retain ownership of five investments in the US portfolio, “for various case-specific reasons. The retained investments total $6.3 million in aggregated capital.