Litigation finance has known considerable growth over the last decade and we are now offering investors an opportunity to get an exposure to this asset class in a simple and secure format.
Litigation finance consists in funding a litigant or law firm before or during a litigation or arbitration to cover case-related expenses. In exchange for receiving funding, the funded party gives up a pre-determined portion of the proceeds from a successful claim. The funder typically advances capital on a non-recourse basis, and takes a security interest in the claim to secure its rights under the funding contract.
Litigation finance is one of the only asset classes where the performance is totally uncorrelated to traditional assets. Furthermore, it has the potential of providing asymmetric returns to investors, i.e. the award decided by a court is not a function of the amount financed.
HighBreed Capital, through their partners, is bringing a strong legal and financial expertise in this field. The portfolio of the fund will be diversified among 30 to 50 commercial litigation cases. Thanks to the excellent track-record of the manager, a large insurance company has accepted to guarantee the majority of the claims, thereby ensuring a 100% protection of the full amount invested by the investor.
The insurance notably covers the risk of a negative decision from the courts, the risk of an award lower than the amount financed and the risk of duration, in case the claim is still not settled after 5 years.
From an investor’s point of view, it is an opportunity to have an exposure to a very high yielding and uncorrelated asset class, with a full capital guarantee. The expected net investor’s IRR is in the region of 15%, with a very low probability that it will ever be inferior to 8-10% per annum.
- Type: Non-correlated alternative asset class
- Sector: Litigation Finance
- Track record: Multiple of 3.5x
- Liquidity: Closed end investment, 8 year duration, partial redemptions as of year 3
- AuM: USD 100m invested in a portfolio of 30 to 50 commercial claims