Burford Capital (BUR) has announced an additional $1.6bn (£1.3bn) in funding for litigation finance investments, including $667m from entering a strategic relationship with a sovereign wealth fund. Under the agreement, a $1bn pool of capital will be invested on a 2:1 basis, with Burford providing the remaining $333m in exchange for 60 per cent of profits generated once the initial investment has been recovered. The news sent the shares up almost a fifth, regaining some ground lost in recent months over wider concerns around the sustainability of high-growth stocks.
A new private fund of $300m has also been raised, with the fund’s investors paying a 2 per cent annual management fee on commitments and a 20 per cent performance fee of fund profits. An additional $300m will also be made directly from Burford’s balance sheet. The total sum will finance investments for the next four years, with the litigation finance specialist directly investing 42 per cent of capital and receiving 60 per cent of the resultant profits.
