Funder bolt and lightning

By | 3rd November 2009

Less than half the funds sought by putative litigation funder Burford Capital were subscribed last month as the London market’s second biggest listing of the year flopped.

Only £80 million was provided by investors in the IPO on the AIM market. Burford had sought £200 million.

The company needed the money to fund commercial disputes in the US. While £80 million is a sizeable sum, Burford will not be able to fund many pieces of litigation in the US with it especially if they have a high threshold below which they will not contemplate lending.

I am a fan of litigation funding in the right circumstances and I hope that this lack of interest on the part of investors does not presage a more general malaise in the market for funds to support litigation. The fear must be that, when coupled with the outcome of the House of Lords case in July involving Stone & Rolls and Moore Stephens (see Third party funding and the credit crunch, 15th Sept.), we may be seeing the start of an increasing reluctance by the financial markets and private investors to become involved in this type of venture — which I think would be a shame.