Litigation Funder Considering Funding Claims Against Tesco

By Rhiannon Hoyle 

SYDNEY--Litigation funder IMF Bentham Ltd. and U.S.-based investment adviser Elliott Management Corp. are considering funding claims of some shareholders in Tesco PLC, which has come under fire for actions that led to a GBP263 million ($413 million) overstatement of its forecast fiscal-first-half profit.

The U.K. Serious Fraud Office last month said it had opened a criminal investigation into the accounting practices of Britain's biggest retailer, which was already under investigation by the Financial Conduct Authority, another U.K. regulator.

Tesco has denied that any individual had gained financially from the practices and said at the time it had been cooperating fully with the SFO and would continue to do so.

On Wednesday, Australia-listed IMF Bentham said Bentham Ventures B.V.--a joint venture between its business and subsidiaries of funds managed by Elliott Management--"proposes to fund claims" of certain investors in the U.K. retailer. It is the first action proposed to be funded by the joint venture.

"The claims relate to alleged misleading and untruthful statements and omissions made by Tesco concerning overstatements of its profits in recent financial reporting periods," it said in a filing to the Australian Securities Exchange. A spokesperson for Tesco wasn't able to immediately be reached.

Warren Buffett's Berkshire Hathaway Inc. recently recorded an impairment charge of $678 million related to its investment in Tesco stock. Mr. Buffett said last month he made a "huge mistake" on Tesco, and has reduced Berkshire's stake in the grocer.

Write to Rhiannon Hoyle at [e-mail]

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