Burford Capital Share Discussion Threads

[williamcooper104] 16/10/2020 21:18

There's merit in the idea of packaging up pools of claims as a capital markets instrument - this has happened with the catastrophe re-insurance market Asset backed securities where mainly rated on loss given default - given that methodology you ought to be able to rate a chunk of a diversified portfolio of claims as AAA

[jockthescot75] 16/10/2020 19:59

Law360 (October 15, 2020, 9:37 PM EDT) -- With the strike of a bell, litigation funder Burford Capital Ltd. on Monday morning will join investment behemoths like BlackRock and Vanguard with a launch on the world's premier stock exchange — potentially previewing a new era of "securitization" of legal investments.

Along with the investor cash and visibility that comes with a spot on the New York Stock Exchange, Burford's move presages the sale of a new kind of bond backed by a bespoke set of profit-generating legal disputes.

Amid last-stage planning for the launch, Burford CEO Chris Bogart told Law360 in recent days that the NYSE listing, regulator approval and the company's recent credit ratings all position Burford to issue litigation-backed bonds. He called that move "likely" in the company's next phase.

Of the NYSE listing, he said, "This helps Burford grow, and makes investors more comfortable with the quality of the assets."

Burford, already the biggest and most visible legal funder in the U.S., will be the first such firm to join the NYSE. And after spending more than a decade on the London AIM Stock Exchange, Burford is poised to be the first funder globally to be dual-listed.

Many connected to the still-growing community of private legal funders see Burford's launch on the NYSE as a public-relations boon for the entire industry, and a high-profile validation for a sector of the investing community that has exploded in size and influence over the last decade.

But some say the unpredictable qualities of litigation will make designing a security with predictable revenue a serious challenge. The move may also frustrate investors conditioned to the kind of transparency about underlying assets that isn't available in confidential legal matters.

The untried nature of a litigation funding bond also raises questions about how buyers and issuers would negotiate the fallout if a set of securitized litigations hits a wall, said restructuring and legal finance expert Marc Carmel of McDonald Hopkins LLC.

Unlike in a scenario where a distressed company is negotiating with debt holders, "a litigation funder can't demand that lawyers be replaced or otherwise take drastic action to right the ship if a portfolio of cases goes wrong," he said.

"With litigation funding, there is no example to point to about what to do when you're trying to work out a situation where there is a real problem," he added.

While third-party litigation funding has been a feature of the legal landscape in Australia and the United Kingdom for decades, only since the 2008 recession has the practice really taken off in the U.S.

Particularly over the last six years, Burford and its publicly traded competitor, Omni Bridgeway Ltd., formerly known as IMF Bentham, have led a substantial expansion in many legal markets, promoting the benefits of legal financing to the legal and investor communities.

In "traditional" commercial litigation funding deals that remain the norm for much of the sector, a private investment firm gives a claimant cash up front to pay lawyers and other legal expenses. In exchange, the investor gets a sizable cut of any future recovery. If the case is lost, so is the investor's money.

In recent years, Burford and others have also branched into more creative and complex financing structures, particularly direct partnerships with firms, legal fee and settlement "advance" deals, and purchases of stakes in large portfolios of similar litigations. With Burford and others promoting healthy returns and growing acceptance of the practice in many courts, a "secondary" market in which institutional investors buy and sell interests in single cases has also emerged.

In one notable "secondary" deal from 2018, Burford sold an interest in an Argentina arbitration for $107 million — a stake for which it originally paid $12.8 million.

Funders say these developments have led to more creative thinking in the industry about how to raise and deploy capital into a greater range of cases. That discussion has also delved into the possibility of funders "bundling" a group of similar investments and issuing a bond, not unlike a mortgage-backed security. Burford and Omni have previously issued bonds backed by overall corporate assets.

Bogart said that a security including "dozens" of funded matters would allow more kinds of investors to get into the field, but at a lower cost and without having to assess any specific claim or funding contract.

It would also give Burford another fundraising option that would split up returns — and the risk that the security would falter — across more players. At the same time, the originator could keep case and legal assessments provided by claimants to secure the initial investment out of the public domain.

"The challenge in our business in selling interest in individual pieces of litigation is the buyer needs to know enough about the case to buy an interest in it," Bogart said. "But a lot of that information is privileged."

J.B. Heaton, a former Bartlit Beck LLP litigator who now heads finance consultancy One Hat Research LLC, said that from an investor point of view, a litigation-funding bond would be an oddball. He noted that investors evaluating a traditional loan-backed security have reams of bond market history to draw on, little of which would be helpful for a legal funder-originated security.

Investors also evaluate bonds based on borrower credit scores, loan-to-debt ratios and other familiar data reflecting the potential for regular returns and the stability of the underlying assets — none of which is available for legal cases.

"My sense is this would be something really different from the kind of information a bond investor, or really any kind of investor, is going to want to see in a fixed-income security," Heaton said.

"The fact that Burford is willing to do the [NYSE] listing is a powerful statement that they think the business can withstand SEC and investor scrutiny," he added. But designing and selling a legal funding bond "may be some wishful or just aspirational thinking at this point."

Carmel noted that issuing case-backed bonds could, at least in theory, impress Burford's investors and clients by positioning the company as a pioneer in the practice, while adding a new tool for managing its various financial exposures.

Pricing bonds would also give Burford a way to "signal" to investors the company's confidence in the success of its investments and its ability to accurately value them — without revealing anything proprietary.

"It's a way to explain to the stock market how to value their whole portfolio and the value of the company," Carmel said.

For the moment, Omni has no similar aspirations.

CEO Andrew Saker said the company's debt covenants, which are in place for the next several years, would not allow for this kind of debt instrument.

"Maybe by then we will see a more sophisticated debt market that is prepared to take a recourse-only security interest in a portfolio of litigation assets," he said in an email.

"However, at least in the debt markets in which we operate, I doubt we will be able to convince debt providers to take such risks, even with our extensive track record and success rate, unless we are prepared to pay usury rates," he said.

--Editing by Aaron Pelc and Michael Watanabe.

Read more at: hxxps://www.law360.com/articles/1319996?copied=1

[danieldruff2] 16/10/2020 18:12

Enjoyed the podcast, though it did remind me of a friend's sceptical view of stock trading: "posh gambling"

[williamcooper104] 16/10/2020 15:50

Will have a listen - love podcasts

[donald pond] 16/10/2020 15:42

New podcast out guys, do subscribe and share with all your online buds. We got to number 7 in the UK investing charts this week, which was very nice



Good luck for next week everyone, I've genuinely no idea what will happen

[rar100] 16/10/2020 14:45

dgdg1,

I would hope that BUR have some sort of PR dept. or individual whose responsibility it is to liaise with the Financial press & media, but I don't know if they have one.
Being an IPO or their equivalent in the US, the press should be looking at them, but BUR should be doing their own trumpeting with the likes of Bloomberg and all the financial press.

imho

[stoxx67] 16/10/2020 10:18

agreed Kirkie

[kirkie001] 16/10/2020 09:52

As the UK is "earlier" in terms of time zones than the US, it will default to UK timings - there's a requirement on both exchanges that material news is released to the whole market without undue delay.

So I'd expect everything that comes out at 7am currently, will continue to be 7am.

That's the way that most of the Big FTSE-100 boys with dual listings do things as well, I think.

[dgdg1] 16/10/2020 08:16

How would Burford make announcement to US investors, is there a news service similar to RNS/Investegate and how does one access it? Would all announcements be made simultaneously on that service and in the UK?

[tightfist] 16/10/2020 07:41

Hi Bamboo, when I held a share that transitioned to dual AIM & Nasdaq listings, RNS timing immediately became dictated by Nasdaq requirements and defaulted to midday UK time..I guess it's wait-and-see for Burford. Cheers, tightfist

[gettingrichslow] 15/10/2020 22:32

All of this goes to show that it pays to have your money spread around different brokers. Not least because they’re all good at different things. But also because you have to be careful not to have more than £85,000 in cash with one broker. This is just another good reason to not be with only one.

[williamcooper104] 15/10/2020 17:34

My little IB trade was cash

[dagoberia] 15/10/2020 16:43

I bought 3 lots of 200 shares today on IG.. last one at 16:29 lol.. so not cfds

[williamcooper104] 15/10/2020 16:27

Is a zombie I'm happy to own

[tradertrev] 15/10/2020 16:26

OF2 - this could be because IG is trading a CFD rather than the underlying shares? They can price and trade these anyway they like as far as I know.

[dagoberia] 15/10/2020 16:21

Looks like this is a zombie share until monday.. not sure what is going on

[old fool2] 15/10/2020 15:54

I would love to know what's going on with this share. I have accounts with H/L & IG. H/L would not let me buy or sell. IG would allow me both. I wanted to buy 2k could not get a price, tried several times no luck. I could see loads of AT buys & sells going through but no offer available for me. I reduced the size and I did get an offer 3p above the current price displayed. In the end I ended up paying more for my shares than all the AT buying going through. Can anyone explain what's happening today? Thank you.

[kaos3] 15/10/2020 15:04

arbitrage will be possible

[bamboo2] 15/10/2020 14:44

I am guessing that after the US listing, UK opening prices will become more erratic, as there will be differences caused by alternate closing prices and currency. The chart will look more gappy!

It could also mean that RNS might be released at a different time of day.

Any thoughts?

[warno01] 15/10/2020 13:23

Still trading on Saxo.

[tradertrev] 15/10/2020 13:07

Crest registered DIs will trade AIM hours, US registered shares will trade US hours.
It will be possible to convert from one type to the other at a cost, but this will probably only be done by broker-dealers/market-makers looking to (hopefully) satisfy US demand with UK Crest registered DIs, which of course they will have to buy in the London market. This is my understanding only.

[rar100] 15/10/2020 12:54

syoun2,

I would think that you could trade on AIM up to 4.30, and if your account with your broker or platform allows you to trade in US stocks, that you could trade there also.
But that's just my guess, I would think a direct question to BUR themselves would be your best bet. Then if you get an answer, it would be kind of you to let us know here.
Good luck!

[syoun2] 15/10/2020 12:39

Meant to say does anyone know...

Thanks in advance for replying