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11 March 2020

LCM announces first close of $150m disputes finance fund as interest in asset class grows

AIM-listed litigation funder attracts investments from US university endowments and global fund managers

By Ben Edwards

Pic of Patrick Moloney

LCM CEO Patrick Moloney: 'First step towards LCM operating a funds management business.'

Disputes financing firm Litigation Capital Management (LCM) has completed the first close of a new $150m fund, marking its return to managing third-party funds.

The AIM-listed litigation finance provider has so far raised $140m, with the first close allowing LCM to start deploying the capital immediately. LCM said it would raise the remaining $10m in due course. 

The LCM Global Alternative Returns Fund gives investors the opportunity to share in potential payouts from legal disputes by investing in single cases or through a portfolio of claims. 

The fund will be seeded with nine single-case investments including international arbitrations, class actions, commercial litigation and investor state treaty claims.

Investors in the fund include two US university endowments, the asset management unit of a global investment bank, a Swiss asset manager that specialises in litigation finance, and a large European family office, LCM said.

Patrick Moloney, chief executive officer of LCM, said: “The entry into this external fund provides a significant increase to our available capital and a boost to our investment capability, enabling us to broaden and accelerate the expansion of our portfolio with a view to ultimately delivering greater returns for shareholders.”

He added: “It also constitutes the first step towards LCM operating a funds management business. Indeed, future funds will be underpinned by the entrenched rights of our cornerstone investors.”

Austrlia-based LCM, which listed in London in 2018, will use its own capital to co-invest 25% in each investment alongside the fund. 

Nick Rowles-Davies, LCM’s executive chairman, said: “The fact such high-calibre investors have insisted upon entrenched contribution rights in future funds is a very valuable endorsement of LCM’s ability to attract blue chip investment capital on a global scale.”

LCM’s fund raising comes at a time of growing interest in the disputes finance sector. AxiaFunder, a UK litigation funding platform aimed at SMEs, this week raised more than £200,000 through a public crowdfunding campaign.

Cormac Leech, chief executive officer and founder of AxiaFunder, said: “As the cost of litigation rises, litigation funding is more important than ever to the rule of law and to a more inclusive society. AxiaFunder provides capital for smaller commercial litigation cases thereby helping the legal system to function more effectively.”

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