Burford Capital Limited · LSE:BUR
Burford Capital — Investor Presentation (November 2022)
28 slides from Burford Capital's investor presentation, November 2022
Slide 1: Burford Capital Investor Presentation
NOVEMBER 2022 Burford Capital Investor Presentation This presentation is for the use of Burford’s public shareholders and is not an offering of any Burford private fund.
Slide 2: Notice & disclaimer
Notice & disclaimer This presentation (this “Presentation”) provides certain information to facilitate review and understanding of the business, operations and results of Burford Capital Limited and its subsidiaries (the “Company” or “we”, “our” or “us”) and does not purport to be a complete descrip
Slide 3: Table of contents
Table of contents Content Slide(s) • Overview 4-5 • Market position 6-7 • Diversified portfolio 8 • Outsized returns 9-10 • Portfolio analysis 11-13 • Growth opportunities 14 • New business 15 • YPF-related assets 16 • Asset management 17 • Liquidity and debt maturities 18 • Key investment themes 19
Slide 4: Burford is well-positioned for strong growth and rising returns
Burford is well-positioned for strong growth and rising returns ✓ Global leader in rapidly expanding legal finance industry ✓ Favorable asymmetric and outsized returns uncorrelated to the financial markets or the overall economy ✓ Significant competitive advantages enable barriers to entry ✓ Diversi
Slide 5: Burford is the global leader in legal finance
Burford is the global leader in legal finance COMPANY OVERVIEW PORTFOLIO Group-wide1 portfolio growth • Clear market leader in legal finance At period end 5,469 ($ in millions) 5,094 • $5.5 billion Group-wide1 portfolio of legal assets at June 30, 2022 4,483 756 4,209 661 • Provide commercial legal
Slide 6: Significant runway for growth
Significant runway for growth LARGE AND GROWING MARKET INDUSTRY LEADER BY A SIGNIFICANT MARGIN • Demand for legal services continues to grow • Proven commercial legal finance platform with • $900+ billion global legal services market1 significant scale and meaningfully larger than our • $2+ trillion
Slide 7: Competitive advantages contribute to outsized returns
Competitive advantages contribute to outsized returns IN-HOUSE DUE STRONG CORPORATE MOST RECOGNIZED SIGNIFICANT SIZE, DILIGENCE AND LAW FIRM PROPRIETARY DATA BRAND NAME IN THE SCALE AND SCOPE CAPABILITIES RELATIONSHIPS INDUSTRY1 • World’s largest • Differentiates Burford • We are often their first •
Slide 8: Group-wide capital provision-direct portfolio diversified across several measures
Group-wide capital provision-direct portfolio1 diversified across several measures By geography By currency December 31, 2021 December 31, 2021 ($ in millions) 3% ($ in millions) 2% 3% 6% 11% 23% 44% 3,764 3,764 27% 81% North America Global Europe Asia Other USD EUR GBP AUD By case type By industry
Slide 9: Burford has generated strong cash-on-cash returns
Burford has generated strong cash-on-cash returns • Burford has generated consistently high returns on nearly $2 billion of cash realizations since inception in 2009 • A recurring mix of settlements and wins drives strong returns in reasonable time frames, with asymmetrically low losses Burford-only
Slide 10: Burford-only concluded assets arrayed by ROIC
Burford-only concluded (fully and partially) capital provision-direct assets arrayed by ROIC From inception through June 30, 2022 Favorable asymmetric ($ in millions) returns 0% or less 0 to 99% 100 to 199% Greater than 200% ROIC ROIC ROIC ROIC Total Deployed: Profit: Deployed: Profit: Deployed: Pro
Slide 11: Significant potential from larger and more recent vintages
Significant potential from larger and more recent vintages • Stepped-up deployments over the last several years, coupled with comparatively low levels of resolutions, position the portfolio to have the potential to generate significant realized gains • Weighted average life of our concluded portfoli
Slide 12: Proprietary probabilistic model suggests significant realized gains
NOT A PROJECTION – SEE DISCLAIMER Proprietary probabilistic model suggests significant realized gains and an increase in returns • At December 31, 2021, our probabilistic model1 suggested Implied realizations and performance fees based on that our portfolio of Burford-only capital provision-direct B
Slide 13: Timing of litigation resolutions is inherently uncertain
Timing of litigation resolutions is inherently Burford-only weighted average life of fully and partially concluded capital provision-direct portfolio From inception through period end uncertain ($ in millions, WAL in years) 2.4 • Most cases settle and pay proceeds 2.3 2.3 2.3 in a relatively short p
Slide 14: Continued growth through expansion of client base, new markets and product innovation
Continued growth through expansion of client base, new market entry and product innovation GROWTH DRIVERS REPEAT & NEW CLIENTS NEW MARKETS2 PRODUCT INNOVATION • Growth from continued adoption of legal • Existing clients in 37 countries and 41 US states • Innovations provide growth and scale finance
Slide 15: Further growth in Burford-only new business activity
Further growth in Burford-only new business activity • Record first-half Burford-only capital provision-direct new commitments in our potentially highest returning assets in 1H 2022, driven by strong client demand and innovative structures - Reflects shift in asset allocation in BOF-C arrangement in
Slide 16: YPF trial court summary judgment decision expected later in 2022 or 2023
YPF trial court summary judgment decision expected later in 2022 or in 2023 • YPF cases are now fully briefed before the court and awaiting court resolution of summary judgment phase • Summary judgment allows for possible judicial ruling without a trial; related filings are public • If the case is r
Slide 17: Asset management
Burford-only asset management income ($ in millions) Asset management 17 12 • With a $2.0 billion portfolio of 11 managed funds at June 30, 2022, we 11 1 believe we are the largest 1 8 investment manager focused on 7 legal finance 2 • Enables greater diversification 2 9 and larger transactions 6 5 4
Slide 18: Robust liquidity, low leverage and laddered maturities
Robust liquidity, low Burford-only liquidity and receivables1 leverage and laddered At period end ($ in millions) maturities 52 • Burford-only cash and marketable 31 63 126 securities of $430 million at June 30, 16 20221 175 430 • Well within debt covenants 320 336 315 304 • Consolidated net debt as
Slide 19: Burford is well-positioned for strong growth and rising returns
Burford is well-positioned for strong growth and rising returns ✓ Global leader in rapidly expanding legal finance industry ✓ Favorable asymmetric and outsized returns uncorrelated to the financial markets or the overall economy ✓ Significant competitive advantages enable barriers to entry 1 Diversi
Slide 20: Appendix: Reconciliations
Appendix: Reconciliations
Slide 21: Statement of operations for the six months ended June 30, 2022
Statement of operations for the six months ended June 30, 2022 Elimination of third-party interests Strategic Advantage ($ in thousands) Consolidated Value Fund BOF-C Colorado Fund Other Burford-only Revenues Capital provision income 110,278 (2,277) (24,822) 1,368 (820) (9,952) 73,775 Asset manageme
Slide 22: Statement of operations for the six months ended June 30, 2021
Statement of operations for the six months ended June 30, 2021 Elimination of third-party interests Strategic ($ in thousands) Consolidated Value Fund BOF-C Colorado Other Burford-only Revenues Capital provision income 84,428 (4,015) (11,762) 1,698 (3,916) 66,433 Asset management income 4,329 1,073
Slide 23: Statement of operations for the six months ended June 30, 2020
Statement of operations for the six months ended June 30, 2020 Elimination of third-party interests Consolidated Strategic IFRS Value fund BOF-C fund Other Burford-only June 30, 2020 $’000 $’000 $’000 $’000 $’000 Capital provision income 260,524 (4,719) (1,872) (2,806) 251,127 Asset management incom
Slide 24: Statement of financial position at June 30, 2022
Statement of financial position at June 30, 2022 Elimination of third-party interests Strategic Advantage ($ in thousands) Consolidated Value Fund BOF-C Colorado Fund Other Burford-only Assets Cash and cash equivalents 353,157 (4,800) (31,182) (25) (8,106) (4,511) 304,533 Marketable securities 125,6
Slide 25: Statement of financial position at December 31, 2021
Statement of financial position at December 31, 2021 Elimination of third-party interests Strategic ($ in thousands) Consolidated Value Fund BOF-C Colorado Other Burford-only Assets Cash and cash equivalents 180,255 (1,561) (38,983) - (33) 139,678 Marketable securities 175,336 - - - - 175,336 Other
Slide 26: Statement of financial position at December 31, 2020
Statement of financial position at December 31, 2020 Elimination of third-party interests Strategic ($ in thousands) Consolidated Value Fund BOF-C Colorado Other Burford-only Assets Cash and cash equivalents 322,085 (2,080) (1) - (418) 319,586 Marketable securities 16,594 - - - - 16,594 Other assets
Slide 27: Covenant reconciliations at June 30, 2022
Covenant reconciliations at June 30, 2022 $ '000s From the condensed consolidated statement of financial position and note 14, Debt issued Debt issued 1,274 less: Cash and cash equivalents 353 less: Marketable securities 126 Consolidated net debt 795 From the condensed consolidated statement of fina
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