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Burford Capital buys rival to diversify revenue

The litigation finance group has made a transformative acquisition
December 20, 2016

Burford Capital (BUR) will buy the largest private litigation finance company Gerchen Keller Capital, significantly upscaling its business and adding investment management services. Burford will pay $160m for Gerchen Keller parent GKC via a mixture of cash, shares and three-year notes.

IC TIP: Buy at 547p

Predominately focused on US litigation, GKC has been branching out and is financing the £14bn UK collective action against Mastercard. Unlike Burford, GKC also provides post-settlement finance to parties involved in litigation after they have settled and are pending payment. It has $100m in outstanding post-settlement finance and $400m committed to pre-settlement investments. The acquisition will diversify Burford's revenue stream, since GKC gains performance and management fees from its four investment funds.