Litigation funder reveals 635% return on £4.8m investment

Moloney: Case validates work of investment managers

A litigation funder has reported a 635% return on one investment, while the leading insolvency litigation funder says it is coming out of a Covid-related slump despite a £4m annual loss.

AIM-listed Litigation Capital Management (LCM) said it generated a gross profit of nearly £31m from an investment of £4.8m on an otherwise confidential dispute in the London Court of International Arbitration.

The profit was made up of the investment return of nearly £19m and a success fee of more than £11m.

Chief executive Patrick Moloney said the case “validates the skillset of our investment managers in undertaking a rigorous due diligence exercise and accurately predicting the final outcome of a large and complex commercial dispute resolved through arbitration”.

Separately, LCM announced the conclusion of a case run under International Chamber of Commerce arbitration rules which led to a gross profit of £4.5m on an investment of £1.5m.

LCM’s shares closed on 85p, a 25% increase in just a week.

Meanwhile, Manolete Partners – the specialist insolvency litigation funder also listed on AIM – has reported a £4m loss for the year to 31 March, despite realised revenues on completed cases rising 76% to £27m.

It has also invested in a record number of new cases – 263, 65% higher than the 159 in the last financial year. The company received a record 798 new case enquiries.

Chief executive Steven Cooklin said the results “mask a picture of two very different six-month periods for the company”.

While the first half was “subdued”, as the Covid-related suspension of certain insolvency rules only ended in April 2022, “the second half saw a strong resumption of the growth that the company had exhibited prior to the pandemic, as the UK insolvency market returned to normal operations with a strong recovery in cases being referred to us”.

He added: “We ended the year with another record number of 351 live cases in progress and the company returning to profitability in the second half.

“These positive KPIs have continued into the current FY24 – with signed cases for the first two months of FY24 being 154% higher than the first two trading months of the FY23… With prevalent headwinds of inflation and significantly higher interest rates facing the UK economy, the company is well set for continued growth over the foreseeable future.”

Manolete’s share price was largely unaffected by the results. At 238p, it is 24p down on where it started the year.

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