Litigation Capital Manag... Share Discussion Threads

[74tom] 22/6/2023 11:37

Those items don't need to be mutually exclusive? A good capital allocation policy should balance debt repayment, reinvestment in the business & capital returns to shareholders.

They paid a dividend of A$1.3c in their only full year on LSE before covid hit. A 1p dividend would only cost them £1.2m & would be more of a statement of intent than anything else. It would attract new investors & flag that the balance sheet & outlook was healthy again.

Sure, put the vast majority of the A$78m YTD settlements + A$30m+ of confirmed pending settlements into reducing the debt & funding new cases, however given the LIT balance sheet requirement for matching the entire Fund II value of USD300 is ~A$110m, of which some has already been committed, I don't see how paying out a small dividend would cause any problems.

Interested to see what others think, however I remember some time ago quite a few were keen for a divi to return.

[nchanning] 22/6/2023 11:02

There are still a lot of commitments due from Lits only balance sheet for Fund 2 , the debt was very expensive , and the returns on invested capital are outstanding . So better to reinvest the cash than pay a dividend for me

[74tom] 22/6/2023 10:14

At 31/12 gross debt stood at A$56m, with cash of A$33m, so net debt of A$23m

I have total cash of A$78m returning to LIT from the 5 settled investments reported in H2;

A$11.5m from today's RNS
A$32m from Monday's RNS
A$12.5m from Comet
A$14m from the March class action win
A$8.6m from Carillion

I make the gross profit on the above A$60.75m, assume H1 overheads of A$12m and corp tax of 30% and you get H2 PAT of A$33.6m.

We then have the PFAS settleent of ~A$16m to LIT at 50/50 fund split, plus Rabah A$14.8m+ assuming it's direct, plus Lynchpin as confirmed wins. Plus another 20+ in the pipeline.

Bottom line, the recent wins should comfortably put the company in a net cash position & surely means dividend's are back on the table?

[johnwig] 22/6/2023 09:48

74tom. I would be willing to add up all the successes in the header. Two points, though.

I have noticed that those threads with lots of statistics before you come to the new stuff are pretty daunting.

Secondly,I'm afraid that I would not have the time or opportunity to update the wins at the increasing frequency with which they will most assuredly appear in the future!!!

So please continue to publish the news, good or bad, as it appears.



P.S. I've just seen your latest piece. Impressive research and truly encouraging.

[74tom] 22/6/2023 09:43

As we now have 3 settlements from Fund I with disclosed metrics, I thought it was worth summarising their cumulative statistics;

LIT Invested Capital = A$6.7m
LIT Total Realisations = A$53.1m

Fund Invested Capital = A$20m
Fund Total Realisations = A$66.5m

Total Return on A$26.7m invested = A$119m, that's an ROIC of 345%

The eye popping fact is that the $20m invested in the 3 closed cases represents less than 10% of the USD150m / A$220m Fund 1. In their interims in March 21 they reported that this fund was 70% committed, so there are a whole host of additional cases waiting to close.

Indeed, from the last interims we know the followings;

"Fund I fully committed across 26 investments (two terminated after due diligence), two resolved, one of which resolved in FY22"

So there were 21 outstanding at 31/12, of which 3 have now settled & 1 is pending (PFAS for $33m)

Another 6 Direct investments were either awaiting a judgement or final hearing at 14/03/23, with no new settlements since (given today's was reported in Feb 23)

So we have 23 cases that should reasonably expect settlement in the next 2 years, 2 of which, Rabah (A$14.8m+) and Lynchpin (TBC) have reached judgement this month.

There were a further 8 cases in Fund II at 31/12/22 with a huge amount of capital to commit (the second close for $273m is more than double the current market cap...

Remarkable value situation developing here.

[someuwin] 22/6/2023 07:16

22 June 2023

Litigation Capital Management Limited

("LCM" or the "Company")

Successful resolution of direct balance sheet investment

Litigation Capital Management Limited (AIM:LIT), an alternative asset manager specialising in dispute financing solutions internationally, announces the settlement of an investment forming part of its portfolio of direct investments.

Successful award in investment in arbitration

As previously announced on 23 February 2023, the Company announced a positive development, with respect to a partial award in one of its 100% direct balance sheet matters. A settlement has been reached between the parties following an Award on liability and costs being granted in favour of the funded party. The matter was heard by a Tribunal appointed under the International Chamber of Commerce (ICC) Arbitration Rules. LCM's investment performance is detailed below:


*AUD$m Investment performance
Invested capital 2.9
-----------------------
Investment return (Gross profit) 8.6
-----------------------
Total revenue 11.5
-----------------------
ROIC on investment 293%
-----------------------

*The investment returns are subject to change based on the prevailing FX rate and timing of distribution

Patrick Moloney, CEO of LCM, commented: "We are pleased with the positive resolution of this investment and more generally the momentum in the progress of our portfolio in the second half of our financial year. This is of particular significance, given our first half results which were impacted by the timing, and consequently recognition of resolutions. We believe these recent resolutions demonstrate our expertise and skill in selecting and underwriting investments. Additionally, they reinforce the value and scale our funds management business adds to the Group, creating significant value for our shareholders and investors."

[74tom] 22/6/2023 07:13

Wow, absolutely on fire here… will amend the above list this morning & add in pending settlements which have been shared in this thread - may be an idea to add finalised settlements to the header?

[74tom] 21/6/2023 15:44

This has been sleeping for so long, however it looks like it's finally going to break out. No wonder when you look at recent case wins;

Feb - Carillion - $6.3m LIT / $12.6m total

Feb - Arbitration - estimated $5m LIT

Mar - Aus Class Action - $14m LIT

Apr - Comet - $10.4m LIT / $22m total

May - Aus PFAS - ~$33.2m total (as per page 8 of this doc;

Jun - Arbitration - $29.7m LIT / $58.4m total

That comes to an H2 total of A$133.6m, of which around $81m is directly attributable to LIT...

This blows all previous half yearly & annual results out of the water & is fairly transformational for the investment case.

They always update in July after Y/E close, last year was the 8th. Doubt Patrick will keep the market waiting long given the outstanding numbers they will be reporting!

[someuwin] 21/6/2023 14:53

The Funds management model provides equity investors with the benefit of exposure to superior Fund returns in the form of performance and outperformance fees payable to LCM as manager.

The growth of our funds under management model enables LCM to scale its business and portfolio of investments while enhancing returns for underlying shareholders and delivering long-term sustainable growth.

This also enables us to leverage returns by using third-party funds and our operational scale.

Our third-party Funds comprise sophisticated and institutional investors including:
• Large US university endowments;
• UK and European Pension Funds;
• Large Global Investment bank;
• Family offices; and
• Disputes finance fund of funds

Our experience in selecting high returning investments ensures we maintain competitive return metrics

[someuwin] 21/6/2023 09:34

Over half a billion A$ under management - and growing fast.

"Assets under management increased to A$506m by 31 December 2022 with further commitments in Fund II bringing our AuM to A$537m at 28 February 2023"

[bubloo] 21/6/2023 08:13

kpo115
can you please let me know what is Cdr site

[kpo115] 20/6/2023 20:57

From the CDR site:


"Investors in Litigation Capital Management have cause to celebrate as big arbitration win results in 400% gross profit.


Sydney-headquartered third-party litigation funder Litigation Capital Management has revealed an eye-popping return on investment in an arbitration at the London Court of International Arbitration (LCIA) but, in accordance with the confidentiality customarily afforded to parties involved in arbitration, has declined to name the case. In addition to LCM’s investment, the company’s Global Alternative Returns Fund (GARF) also invested in the case.

LCM and GARF contributed AUD 2.3 million and AUD 6.9 million, respectively, to support the claimant in a long-standing dispute and, following a decision in favour of the claimant, LCM's direct investment generated a gross profit of AUD 14.6 million, representing a sevenfold return on the capital invested. When including the AUD 15.1 million performance fee from GARF's investment, the gross profit totalled AUD 29.7 million, or thirteen times the capital invested by LCM. GARF investors achieved a 415% gross profit."

LIT leverages its expertise and knowledge base far better than BUR, for instancce, which is lurching a bit because of its Argentina crisis which is not improving. I'm glad I'm in here and not in there....

[maddox] 20/6/2023 14:40

LIT is extremely good value a p/e of 5 and PEG 0.1 and after a few years of Court delays - we should have more cases settling.

I really like the way they are writing-up these wins which retains the client anonymity but provides us with some newsflow - hope that this continues even when not material.

[makinbuks] 19/6/2023 19:25

Its not particularly insightful, just repeats todays news then points out these have done little since they were in his bargain portfolio 2019 but are now poised to realise the potential

[scubadiverr] 19/6/2023 17:29

Google the title of the article and you'll bypass the paywall. Works with the FT too

[enronhubbard] 19/6/2023 17:24

Could anyone kindly post the text of the Simon Thompson article, if that is allowed?

[luweiluwei] 19/6/2023 17:03

A lot more cases like this should hit this year.
Well, not like this in regards of ROIC, because this one was extreme.
But there should be a lot more cases resolving and bring in good cash the next 1-2 years.

[nchanning] 19/6/2023 16:45

This is a very important period for LCM . If the first fund is a success they will be well on the way to becoming a niche asset manager with a very profitable fee structure. I think they can compound book value at 20%+ a year using their own balance sheet regardless but the potential to turbo charge these returns with whopping performance funds is evident from resolutions like this .

[makinbuks] 19/6/2023 16:41

ST gave ne the idea for tis back in July 2019, it wasn't as bad a I thought , my entry was £1.02. Lets see what they can deliver next year

[makinbuks] 19/6/2023 15:48

Indeed but still a long way to go to get my £1.20 back

[makinbuks] 19/6/2023 15:46

A$ 2.3m I think, so even better!