Burford boosted by portfolio performance despite dip in projected profits

Litigation funder says it has 'weathered' pandemic as it restores dividend

Burford Capital has announced its best year for portfolio performance to date, with strong gains and increased returns from funded claims although new business was impacted by the Covid-19 pandemic with projected profits  falling below forecast.

Having suspended its dividend in 2020, it said it would resume payment to shareholders at the previous level of 12.5 cents a share. 

“Burford’s business has been disrupted considerably less by the pandemic than might have been feared a year ago,” Burford said in a statement. “To be sure, we saw slowdowns in new business during the first half of 2020, but then a rebound during the second half of the year.

“We have certainly weathered this terrible time much better than many – and the future likely includes an uptick in disputes and, therefore, financing opportunities for Burford.”

The litigation funder’s group-wide portfolio of claims rose by 8% to $4.6bn while cash generation and liquidity also improved.

Burford also flagged the expansion of its portfolio of ongoing matters, despite the impact of the pandemic on new business commitments which fell by 40% to $570m, although in the second half they were just 7% down year-on-year

The funder said that total income would be from $345m-$355m against last year’s figure of $366m with operating profit in the $240m-$250m range, down from $265m last year. It ascribed the fall to higher general operating expenses, disappointing analysts’ predictions, but was bullish about 2021’s potential.

CEO Christopher Bogart said: “2020 was another year of strong performance for Burford. We achieved record amounts of asset realisations from core litigation finance, which generated more realised gains and cash proceeds from case successes than ever before, driving our cumulative concluded case return on investment capital to an all-time year-end high of 92%. 

“With cash on Burford’s balance sheet of $336m at the end of 2020, we are in a strong position to fund the additional future growth we anticipate. We look to the remainder of 2021 with excitement,” he concluded. 

Full preliminary results are scheduled for 24 March.

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