Claimant firm taking on BHP in £5bn suit strikes £100m funding deal
Backing from ESG-focused investment firm follows landmark UK Court of Appeal judgment against mining giant
The London-based claimant law firm taking on mining giant BHP in a £5bn suit is set to receive an extra £100m in funding from investment firm North Wall Capital.
The move marks a significant expansion in the funding relationship between North Wall, a self-described ‘special situations’ investor, and PGMBM, which has brought group cases against a number of major corporations including Volkswagen, British Airways and Bayer.
News of the investment follows PGMBM securing a landmark judgment from the Court of Appeal last week that means victims of the Mariana dam disaster in Brazil will have their case against Anglo-Australian mining giant BHP heard in a UK court. The dam's collapse in 2015 released toxic mining waste down 400 miles of waterways along the Doce River in Brazil and the cases's more than 200,000 claimants makes it the largest group claim in English legal history.
“We are very pleased to announce the continuation of our partnership with North Wall”, said Harris Pogust, PGMBM chairman. “Since we agreed our original partnership, PGMBM has continued to go from strength to strength and has grown to more than 500 employees and more than 1,000,000 clients across several countries. This latest funding will help us as we continue to grow our claim book and we’ve been impressed with North Wall’s ability to grow with us and support our ambitions.”
PGMBM describes itself as a partnership between British, Brazilian and American lawyers and specialises in environmental pollution claims originating in Brazil. It is also active in the UK consumer claims space and in May secured a settlement on behalf of more than 15,000 claimants in the Volkswagen NOx Emissions group litigation and last year on behalf of more than 16,000 people affected by a British Airways data breach.
North Wall’s £100m investment, which PGMBM believes to be the largest for a UK claimant law firm to date, means the company has put in a total of £150m into the law firm.
It is the third investment North Wall has made in PGMBM. The first was not announced publicly but in March last year the two businesses said they had entered a funding partnership and that North Wall would invest £45m to help PGMBM fund group and class action litigation, antitrust and alternative dispute resolution. PGMBM said at the time that the investment brought the total capital raised by the firm to more than £100m.
The latest investment will be funded from the second fund vintage of North Wall’s ESG-focused legal assets strategy. North Wall said the fund, which held a single, one-and-done closing after a brief fundraising period, received support from a range of global institutional investors, including pension funds, asset managers and private banks.
A North Wall spokesperson confirmed that the investment constitutes a loan secured against the revenues from winning or settling the case against BHP or others brought by PGMBM. Bloomberg reported that although the payout in cases like that against BHP is decided on a case-by-case basis, funders and lawyers involved can typically get three times their investment back or 30% of the winnings when things go their way.
Alexander Garnier, founding partner of North Wall, commented: “We are delighted to be able to continue to support [chairman and founding partner] Harris Pogust and the team at PGMBM. We have been impressed with how the firm has cemented itself as the leader in complex ESG-focused multi-jurisdictional group litigations." He added that the investment “demonstrates North Wall’s growing commitment and conviction in the European legal assets space".
London-based North Wall manages more than €1bn of funds on behalf of international institutional investors. The company said it set up its legal assets investment strategy in 2019 when it saw opportunities to finance claims on behalf of consumers relating to malpractice by large corporates and also manages funds focused on distressed portfolios and opportunistic private credit.
A combination of low interest rates and a surge in ESG investing means that cases with a social impact and a potentially sizeable payout, like the one PGMBM is bringing against BHP, can be very appealing for funds on the hunt for lucrative investment targets.
Total assets held by sustainable funds and ESG-focused exchange traded funds grew 53% in 2021 to $2.7tr according to Morningstar and North Wall founder and chief investment officer, Fabian Chrobog, told Bloomberg that although investment managers were not concerned with ESG when North Wall first raised money to invest in lawsuits, in the event it was invested in “100% ESG-compliant litigation.”
Litigation finance is still a relatively small sector but is growing quickly, with FTI Consulting estimating last summer that the global litigation funding investment market would have reached $13bn by the end of the 2021.
A study published last month by RPC found that UK-based litigation funders had amassed record war chests, with such funders' assets jumping 11% last year to hit £2.2bn, almost double the £1.3bn that had been built up in 2017/18 and a more than ten-fold increase over the past decade.