Business
Burford Receives $26m From Innovative Investment
Burford Receives $26m From Innovative Investment.
About this update from Burford Capital Limited
[{"type":"text","content":"\n \nRNS Number : 6471I Burford Capital 03 June 2014 \n \n\n3 June 2014\nBURFORD CAPITAL RECEIVES $26 MILLION FROM INNOVATIVE\nCORPORATE DEBT FACILITY BACKED BY ARBITRATION CLAIM\n \nGround-breaking use of pending claim to drive down corporate borrowing costs \nexpands potential of litigation finance market\n \nBurford Capital Limited, the world's largest provider of investment capital and risk solutions for litigation, today announces that it received $26 million in proceeds from an innovative transaction where Burford1 provided a corporate debt facility linked to an arbitration claim. Burford's counterparty was Rurelec PLC, a publicly-traded owner, operator and developer of power generation capacity internationally.\n \nBurford's 2012 facility permitted Rurelec to monetize the value of its arbitration claim and use that value to obtain a conventional, fully recourse loan from Burford at a lower interest rate than would otherwise have been available to Rurelec in the debt markets. Rurelec used the Burford facility to expand its business while it awaited the outcome of its arbitration. \n \nCommenting on the transaction, Rurelec's Chairman Colin Emson said: \"We were able to use a pending arbitration claim to obtain innovative corporate financing from Burford that lowered our cost of capital and helped our business expand. The Burford team was smart, fast and decisive. The ability to monetize a pending claim is something that we could only have achieved with Burford.\"\n \nThe Rurelec transaction was profitable for Burford, which earned an $11 million net profit on a $15 million investment, generating a 73% return and a 34% IRR. However, what is noteworthy about this transaction is its innovative structure.\n \nLitigation finance is often thought of as non-recourse financing to pay the costs of bringing a piece of litigation. The reality is considerably broader and more diverse, and Burford deploys capital in many different ways, all centered around evaluating and monetizing a contingent litigation asset.\n \nIn this case, Rurelec was pursuing an arbitration claim against Bolivia for the expropriation of one of Rurelec's power plants. Rurelec did not need capital to pay its lawyers. Rather, it needed capital to continue to ...