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Augusta Ventures completes new £250m fundraising as investors back strong market surge in legal and corporate sectors

Augusta Ventures, a specialist asset manager focussed on the litigation and dispute funding sector, has closed its third pool of funding with £250m of new commitments (including Augusta Ventures co-investment), bringing the firm’s AuM to £585m and enabling the firm to fund an unprecedented pipeline of opportunities in high value litigation and dispute scenarios. The fundraising, which was oversubscribed, was supported by Beach Point Capital Management, the anchor investor in the previous Augusta Ventures funding, and two new investors, Magnetar Capital, who will act as anchor in this funding, and Northleaf Capital Partners. Louis Young, Chief Executive Officer of Augusta Ventures, said: “We are delighted to announce this new £250m capital raising as Augusta seeks to expand its capital resources to meet the increased demand for legal related finance across all sectors and geographies. We have never seen so many strong opportunities.    It is particularly satisfying to see both the continued support of existing investors as well as the addition of two new institutions who have deep experience in the sector. This validates the quality of our investment platform and the amount of the new commitments reflects the depth of the investment pipeline.”  Hitesh Patel, Non Executive Chairman of Augusta Ventures, said:  “Augusta’s largest capital raising initiative signals its intention to rapidly expand its portfolio of investors and funding cases. Augusta has deep expertise in the litigation funding market, and this new funding will enable us to provide Claimants and law firms with even greater access to funding that de-risks litigation for Claimants and facilitates access to justice”. I am excited about working with a talented team at Augusta and its investors and the future prospects of expanding the company’s operations and assets under management.”   
Commercial

Auckland Cladding Case: Defective Product or Incompetent Builders?

The High Court case surrounding James Hardie and its “cladding systems” appears to hinge on whether the products themselves were defective, or if the installers simply erred in their duties.  Radio New Zealand discusses the $250 million case with Victoria Young, a business reporter who has covered the story. In short, the case is expected to last about four months and involve over 1,000 plaintiffs and a multibillion-dollar multinational company. Third-party litigation funding secured from a British funder has enabled the case to move forward. While the case itself may come down to a question of incompetence versus a faulty product, the implications for the legal world lie elsewhere. Some have suggested that litigation funders who bankroll class actions like this are emboldening other plaintiffs to file similar actions. When misled shareholders or other allegedly wronged parties feel they have nothing to lose, signing on with a litigation funder on a non-recourse basis is a sensible option.  This may be worrisome for unscrupulous business owners. But a public perception that chicanery will be met with a well-funded class action may keep a lot of businesses honest.
Commercial

A New Alternative Asset Class: Patents

Patent monetization is a rapidly growing alternative asset class. Fund managers, private equity firms, and hedge funds are all looking toward patents and patent portfolios as key non-correlated investments. The largest patent-focused fund currently active in the industry belongs to Fortress—with $900 million under management and a further $400 million in IP Fund 2. Middle Market Growth explains that firms are raising big capital for litigation funding—with plans to deploy much of it toward various patent cases. Litigation Funders commonly invest in IP enforcement programs or by entering portfolio funding agreements with law firms specializing in IP and patents. Parabellum Capital, for example, raised $450 million for litigation funding just last year. Some of that is already earmarked for patent litigation. Why are financial sponsors reticent to invest in IP litigation? The complexity of cases, low appetite for risk, duration, and the involvement of multiple parties may all be reasons for investor caution. At the same time, working with experienced litigation funders and IP advisers can mitigate many of those risks. IP advisors are an invaluable resource for financial sponsors looking toward patent-related investments. Their ability to source or identify beneficial opportunities, or to set up a framework for monetization, is essential. Depending on investment criteria, an IP advisor can create deals that ensure preferred dividends on investments. In the tech world, patents are as vital as they are neglected as a source of income. However, when financial sponsors and IP advisors work together, these patents can become a source of predictable income. One strategy may be to identify patent assets that aren’t essential to the business, yet can be sold to generate funds that can then be reinvested in the company. Another is leveraging patent portfolios to maximize returns. Ultimately, patent monetization offers flexibility and the potential for impressive returns.
Commercial

Bondholders Seek Crowdfunding for LCF Appeal

Is crowdfunding a good way to finance a case against the FSCS? That’s what LCF bondholders are asking themselves as they look for ways to fund an appeal. Four LCF bondholders are representing the rest of the investors in the class. After the High Court ruled against them, they received permission to take their case to the Court of Appeal. P2P Finance News details that the bondholders may not have the financial means to move forward with the appeal. While attorneys for the bondholders are working pro-bono, lawyers for the FSCS aren’t. FSCS has refused to extend an existing costs agreement to appeals, nor have they provided cost information. A target for the potential crowdfunding drive has not yet been set, according to bondholders. Still, an informal Facebook poll suggests that roughly half of the impacted investors support crowdfunding the appeal. Third-party funding seems like the ideal solution here. Yet the case did not secure funding—owing largely to the logistics of determining the damages for thousands of individual bondholders. A successful appeal could be worth GBP 25 million to LCF investors, and a further GBP 70 million to taxpayers. The judge called on FSCS to reconsider, as not allowing the appeal to move forward for financial reasons would not be in the interests of justice.
Commercial

Evaluating Duration in Commercial Litigation

For investors, duration is both extremely important and commonly underestimated. Assessing how long it may take for a case to go from filing to conclusion to payout is essential when considering funding any litigation. It can take two or more years for a case to reach completion—and even then, there is no guarantee of a speedy payout. Burford Capital explains that 16 months is considered a short period of time for arbitration to run its course. Commercial matters can take two years to reach trial in the United States, while a US District Court case might take more than 35 months to go through the appeals process. Firms and businesses must ask if it’s worthwhile to tie up capital for so long—or if it’s better to monetize such cases instead. Third-party legal finance offers two solutions CFOs should consider. The first is covering fees and expenses. When companies pay these, capital is tied up—maybe for years. Allowing funders to cover fees and expenses enables companies to spend less while achieving the same legal result. The company only repays this if the case is successful. Such is the benefit of non-recourse funding. Funders can advance a portion of a meritorious claim to companies—affording them working capital on the time frame that works best. Litigation funding can be used in these ways to lend flexibility and security to a company’s balance sheet by turning invisible assets into working capital.
Commercial

An Impassioned Defense of Litigation Finance

After a recent article lambasting the industry, Tets Ishikawa of LionFish Litigation Finance penned an impassioned response. Financial Times ran Ishikawa’s defense of litigation funding as a means to allow everyone to seek justice when they’re wronged. Funding helps vulnerable people at times in their life when they need it most. The hard truth is that seeking justice is expensive, and many people cannot afford it. Litigation funding exists to help those people, and increase confidence in the justice system. Ultimately, only those looking to use their money to avoid consequences have reason to fear the growth of the litigation funding industry.
Commercial

ASC Ordered to Produce Patient Billing Records by Florida Appeals Court

Sand Lake Surgery Center was ordered to produce billing records for two patients. A Florida appeals court made the ruling despite Sand Lake selling its stake in the case to American Medical Funding. Becker’s ASC Review explains that Sand Lake refused to provide confidential information about the funder or payments made. The initial ruling did not require Sand Lake to disclose the information. The appeals court determined that the party who declines to produce information must establish how and why the information should not be shared.
Commercial

Climate-Related Litigation is Coming. Who’s Ready?

After the United States, Australia leads the world in climate-related litigation. Some companies, like Rio Tinto, are making climate resolutions of their own. Many other ASX-listed companies are doing likewise—knowing that disclosures relating to climate impact may be coming sooner rather than later. Financial Review details that Australia is looking to compel its largest companies to develop and adopt climate targets, upgrades, and regular status reporting. With a federal election approaching, the climate is expected to take center stage in the public discourse over the coming months. Some say this sets up companies for the herculean task of managing shareholder profit expectations with the goals of climate activists and the needs of local communities. Both the plans themselves and public disclosures are fraught with risk. Currently, climate change disclosure is adapting to a world that’s changing at a dizzying pace. There exist multiple frameworks for voluntary reporting, with the one developed by the Task Force on Climate-related Financial Disclosures containing the most public support. As of now, no single framework has been adopted as the standard. Australian laws sometimes determine liability even when there is no deliberate fault. With that in mind, disclosure on climate targets can invite litigation, even when every good faith effort is being made to meet them. Does this mean companies are better off never disclosing their climate goals or progress? How does that impact the communities they serve? Clearly, there is much ambiguity on this subject. What seems to be needed is a more functional system that balances disclosure with responsibility.
Commercial

Akhmedov Divorce Settlement Hinges on Superyacht

It’s probably not a surprise that London’s biggest divorce settlement has taken years to finalize. The contentious divorce between Tatiana Akhmedova and Farkhad Akhmedov has been going on since 2014. Bloomberg Quint explains that Akhmedova was awarded 41% of her husband’s assets, much of which he earned in the oil and gas industry. This comes to about GBP 450 million. The most prized asset in the settlement is the Luna, a massive luxury superyacht currently anchored in Dubai. The Luna alone is worth roughly $353 million, which comprises a considerable portion of the former Mrs. Akhmedova's settlement. Akhmedova has a funding agreement with Burford Capital. While they declined to comment on the specifics of the case, they reject Akhmedov’s claim that their client is acting in bad faith and that they are involved in a ‘wild goose chase’ in an array of jurisdictions. Meanwhile, Farkhad Akhmedov remains adamant that his ex will not obtain any part of his assets. While he appears to have no legal basis to dispute the order, Akhmedov has stated that he’d rather burn his assets than give them to his former wife. In order to see her share of marital assets, Akhmedova took her own son to court, accusing him of helping his father hide capital and valuable items. Later, a settlement of $100 million to Akhmedova and $15 million to Burford Capital was proposed, but never agreed upon. This forced Akhmedova to continue the pursuit of her award. Akhmedova has managed to seize a helicopter and a private plane. Her hunt for assets is being stymied, however, by her husband changing ownership of items or moving them into other jurisdictions. James Power, part of Akhmedova’s Burford Capital-funded legal team, stated that well-monied individuals can delay the inevitable, but only for so long.