Burford Capital Limited · LSE:BUR
Burford Capital — Investor Presentation (October 2020)
20 slides from Burford Capital's investor presentation, October 2020
Slide 1: Burford Capital Investor Presentation
OCTOBER 2020 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 (“Presentation”) does not constitute or form part of, and should not be construed as, an issue for sale or subscription of, or solicitation of any offer or invitation to subscribe for, underwrite or otherwise acquire or dispose of any securities of Burford Capit
Slide 3: Burford at a glance
OVERVIEW Burford at a glance COMPANY OVERVIEW PORTFOLIO GENERATES HIGH RETURNS • Burford is a specialty finance company that provides financing and risk Total portfolio – Group-wide1 ($ in millions) 4,209 management services to major law firms and their corporate clients to 3,960 2 unlock the value
Slide 4: The world's leading and best capitalized legal finance firm
INDUSTRY LEADER We are the world’s leading and best capitalized legal finance firm WELL POSITIONED TO BENEFIT FROM COMPETITIVE ADVANTAGES CHANGES IN THE LEGAL SECTOR • Significant size, scale and scope - World’s largest diversified portfolio of commercial litigation assets 86% 70% 79% - Consistent c
Slide 5: Burford is just starting to scratch the surface of the market
LARGE ADDRESSABLE WORLDWIDE LEGAL FINANCE MARKET Burford is just starting to scratch the surface of the market • Very large market with significant runway for growth • We expect our products to gain increased traction as we expand to meet our clients’ needs LAW FIRM FEES SETTLEMENTS, JUDGMENTS & AWA
Slide 6: Core litigation finance constitutes the bulk of our assets
PRODUCTS AND SERVICES Core litigation finance constitutes the bulk of our assets CAPITAL PROVISION-DIRECT 86% CAPITAL PROVISION-INDIRECT 7% 7% 21% 58% Complex Strategies Single Case Finance Portfolio Finance Funding as a principal in legal-related Non-recourse funding of legal finance Non-recourse f
Slide 7: A balanced financing strategy, including balance sheet and managed funds
CAPITAL ALLOCATION We have a balanced financing strategy, including our own balance sheet and managed funds Financing by strategy – Group-wide 1 Capital provision-indirect ($ in millions) Capital provision-direct 36% 290 64% 7% 2 Balance sheet Funds BOF-C 23% 3,621 Post settlement 71% 299 100% 2 Bal
Slide 8: Unit economics
CORE LITIGATION FINANCE Unit economics ILLUSTRATIVE SCENARIO: • Company A has a legal claim against Company B • Company A’s fees and expenses to pursue the claim - $10 million • Value of legal claim - $100 million • Burford funds Company A’s fees and expenses - $10 million • Financing is structured
Slide 9: Attractive returns from both settlements and adjudications
ATTRACTIVE RETURNS Burford generates attractive returns from both settlements and adjudications • Cumulative recoveries from adjudication-gains now at $832 million, up 49% from 31 December 2019 • Burford has produced positive outcomes across 90% of its deployments by cost Capital provision-direct as
Slide 10: Asymmetric and uncorrelated returns on adjudications drive attractive total returns
ATTRACTIVE RETURNS Concluded (fully and partially) capital provision-direct assets Burford balance sheet only—arrayed by ROIC (%) Asymmetric and ($ in millions) uncorrelated returns on A B C D adjudications drive 0% or less ROIC 0 to 99% ROIC 100 to 199% ROIC Greater than 200% ROIC Total attractive
Slide 11: 1H 2020 realizations increased cumulative returns
ATTRACTIVE RETURNS 1H 2020 realizations increased cumulative returns, with little impact on concluded asset tenors Capital provision-direct Capital provision-direct Burford balance sheet only Burford balance sheet only Portfolio returns—concluded (fully and partially) portfolio Weighted average life
Slide 12: Seasoning of recent large vintages expected to drive future realizations
PROFIT DRIVERS Seasoning of recent large vintages expected to drive future realizations Capital provision-direct realizations by vintage Burford balance sheet only ($ in millions) $1,568 IN REALIZATIONS TO DATE ROIC: 97% IRR: 32% 343 270 REALISATIONS 183 190 150 116 122 78 40 33 43 12 18 36 58 DEPLO
Slide 13: Impact of COVID-19: deferral rather than loss of income
IMPACT OF COVID-19 Though near-term realizations might be lower where court delays occur, we anticipate deferral rather than loss of income • COVID has caused some deferral of cases, as courts have slowed down - Cases continue to work their way through the system • We believe COVID-related delays wi
Slide 14: Commitments and deployments down in 1H 2020 because of pandemic
IMPACT OF COVID 19 Commitments and deployments down in 1H 2020 because of pandemic; pipeline rebuilding in 2H 2020 • Burford has experienced significant growth in commitments over its history prior to the 2020 pandemic • Disruption to clients’ operations and Burford’s disciplined approach in an unce
Slide 15: Substantial liquidity and a conservative debt structure
SOLID BALANCE SHEEET Burford’s substantial sources of liquidity are complemented by a conservative debt structure L I QUI DI T Y C ONS ERVAT I VE DEB T S T R UCT UR E • Continue to maintain large immediately available liquidity balances, • Debt maturities are considerably longer than its expected as
Slide 16: Conclusion: Burford's future is bright
CONCLUSION Burford’s future is bright • Large and diversified portfolio – largest in the industry • Expanding client demand • Strong growth prospects • Meaningful competitive advantages and barriers to entry • Significant investment capacity from diversified funding sources • Attractive and uncorrel
Slide 17: Supplementary data
Supplementary data [Burford
Slide 18: Statement of comprehensive income for the half year ended 30 June 2020
RECONCILIATION OF BURFORD -ONLY RESULTS TO CONSOLIDATED FINANCIAL STATEMENTS Statement of comprehensive income for the half year ended 30 June 2020 * The eliminated amounts arise from the services provided by the Group Burford balance Consolidated Elimination of Burford balance Other to the consolid
Slide 19: Financial position for the half year ended 30 June 2020
RECONCILIATION OF BURFORD -ONLY RESULTS TO CONSOLIDATED FINANCIAL STATEMENTS Financial position for the half year ended 30 June 2020 Elimination Burford Elimination Burford Consolidated of third-party balance sheet of third-party balance sheet IFRS interests* only Consolidated interests* only AS OF
Slide 20: Burford Capital
Burford Capital
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