Omni Bridgeway Ltd · ASX:OBL
Omni Bridgeway — Citi's 12th Annual Australia & New Zealand Investment Conference (October 2020)
28 slides from Omni Bridgeway's conference presentation, October 2020
Slide 1: Citi's 12th Annual Australia & New Zealand Investment Conference
Citi’s 12th Annual Australia & New Zealand Investment Conference October 2020 IMF Bentham, Bentham IMF, ROLAND ProzessFinanz have all now adopted the unified global name Omni Bridgeway.
Slide 2: Disclaimer
Disclaimer • The material in this presentation has been prepared by Omni Bridgeway and is general background information about Omni Bridgeway's activities. The information is given in summary form and does not purport to be complete. • A number of terms used in this presentation including: ROIC, EPV
Slide 3: Global Industry momentum
Global Industry momentum > US$9.5 billion AUM Regulatory liberalization – increasing effective addressable market (US alone) Third Party Funding Litigation Funder Legislation (Hong Kong) Code of Conduct Administrative Insolvency practitioners IMF first publicly listed Fostif (UK) Resolution Supreme
Slide 4: Worldwide team and capabilities
Worldwide team and capabilities 84% 1, 2, 3 SUCCESS RATE 18 10 ~160 25+ 1029 725 304 A$2.2b Offices Countries Specialists Languages Total Completed Active Funds under investments2, 3 investments2, 3 investments3 management All data at 30 June 2020. 1 | Success rate by number of completed investments
Slide 5: From case conception to post-judgment enforcement and recovery
w From case conception to post-judgment enforcement and recovery Vision Providing human and financial capital for legal risks along the litigation To be recognised as the spectrum including: global leader in financing • Pre-judgment merits based disputes and managing legal risk including litigation
Slide 6: Dispute resolution finance model
What is litigation Dispute resolution finance model funding? • Specialty finance – growing rapidly as corporates and their Litigation funder enters Litigation Funding advisers embrace benefits Agreement with Claimant • Non-recourse capital for commercial and class action claims CLAIMANTS LAW FIRMS O
Slide 7: Merits litigation funding
Merits litigation funding 1. Outline of Claim 2. Application Review 3. Offer of Funding Confidentiality agreement, Claim Omni assesses: Omni Investment Committee evaluates due outlined by client or their legal • Type and strength of case diligence report by an Omni Investment Manager. representative
Slide 8: Enforcement Funding - Investment procedures
Enforcement Funding - Investment procedures Pre-investment due diligence The investment and engagement committee monitors the progress of prospective cases: Team Preliminary Preliminary Transaction Budgeting Client Workout and allocation recoverability merits structuring process reporting legal stra
Slide 9: Asset Recovery – Investment procedures
Asset Recovery – Investment procedures Distressed assets workout Recovery Sale Assessment of Trade Exit secondary market Workout Settlement & Restructuring Amicable settlement Discounted or deferred Initial legal proceedings often payment, debt swaps, debt lead to cooperative workout conversions, ba
Slide 10: Highlights for FY20
Highlights for FY20 FINANCIALS: REFINANCED DEBT: • Material number of conditional and unconditional completions • Extended maturity profile generating $314m of revenue and income • Aligned covenants across debt facilities • $98m of NCI extinguished • Reduced borrowing rate • $628m of investments (ma
Slide 11: Financial Results Overview
Financial Results Overview FY 2020 FY 2019 % move from $m $m prior year Litigation contract income 257.5 35.0 ▲636% Revenue from cases 21.7 - Purchased claims income 9.7 - Management & performance fees 1.4 0.1 Other income (incl foreign exchange & interest) 24.0 9.9 ▲142% Total revenue and income 31
Slide 12: Operating Expenditure
Operating Expenditure FY 2020 FY 2019 • Actual cash costs have increased 20% from the prior year, however they have $m $m decreased as a percentage of net assets, investments and EPV, reflecting an As per Profit and Loss Statement improvement in operational efficiency. Finance costs (1.4) (0.1) • In
Slide 13: Sources and Applications of Cash
Sources and Applications of Cash FY 2020 FY 2019 • IFRS reporting does not necessarily represent the cash generating capacity of $m $m the business given revenue recognition principles and capitalisation of certain Cash generation expenses into intangibles. Proceeds from litigation funding 171.0 43.
Slide 14: Balance Sheet Strength and Investment Portfolio
Balance Sheet Strength and Investment Portfolio Cash & Net Receivables Net Assets ($m) 312.2 ($m) 767.2 217.6 515.5 139.1 141.8 142.4 367.8 201.4 206.3 • Material growth in all key metrics including income, liquid assets, net assets, investments and portfolio. FY16 Balance Sheet FY17 Fund 1 FY18 FY1
Slide 15: EPV Portfolio
EPV Portfolio Quarterly portfolio update 30 June 2020 Funds Balance Sheet 1 2&3 4 5 6 7 Total EPV Movement for quarter # # # # # # # # AUD billion Funded investments (opening) 13 31 32 5 6 - - 87 10.5 Inclusion of OBE Group 5 - - - - 180 - 185 New investments - - 2 4 5 - - 11 Completed investments (
Slide 16: EPV Diversity
EPV Diversity EPV by Geography EPV by Investment Type 0% 10% 13% 13% 1% 18% 11% 43% 0% 27% 6% 21% 2% 23% 10% 1% Appeal Arbitration Commercial Corporate Funding Insolvency Law Firm Asia Australia Canada UK & EMEA United States Multi Party Other IP Patent Whistleblower Inclusion of OBE Group • Diversi
Slide 17: Funding Funnel
Funding Funnel Funding applications continue to grow year on year as our geographic expansion takes hold. Investments from year-to-year largely track funding commitments. Funding Applications Funding Commitments 1,400 1,296 400 700 1,200 350 600 974 300 Funds Committed ($million) 1,000 866 500 Inves
Slide 18: Fund Structures
Fund Structures Description Fund 1 Funds 2 & 3 Fund 4 Fund 5 Funds 6 and 7 (incl DARP JV) Fund size US$167M A$180M US$500M US$500M €195M IMF / Omni 25% 20% 20% 20% 5% contribution Market USA ROW USA ROW EMEA Type European whole of fund European whole of fund American deal by deal American deal by de
Slide 19: Fund Summary
Fund Summary Investors Omni Bridgeway Commence Capital Returns1 Capital Fees EPV date Fund size Committed A$m A$m A$m A$m A$m Fund 1 10 Feb 2017 USD 167m 100% 127.9 40.9 60.8 6.3 2,798.8 Funds 2 & 3 3 Oct 2017 AUD 180m 99% 50.1 20.0 16.2 1.4 2,939.9 Fund 4 1 Apr 2019 USD 500m 22% 103.2 24.2 25.8 - 3
Slide 20: First Generation Funds
First Generation Funds We have been asked how we analyse the ability of the first generation funds to return value to OBL shareholders based on their current portfolios and returns to date. Whilst Omni Bridgeway does not provide earnings guidance or forecasts and notes that past performance is not n
Slide 21: ROIC Track Record
ROIC Track Record ROIC • ROIC as a measure for our investments is becoming less relevant given our transition 165% 163% 165% 156% to funds management. 154% 160% 159% • ROIC in the US has declined over the last 147% financial year as a consequence of investments 121% 118% 134% 132% that completed in
Slide 22: Wivenhoe and Westgem
Wivenhoe and Westgem • The decision was handed down in November 2019 in favour of our funded clients, • The Supreme Court of Western Australia has delivered judgment in the Westgem and which found the defendants Seqwater, Sunwater and the State of litigation in favour of the defendant and has dismis
Slide 23: Regulation / Common Fund Orders / Contingency Fees
Regulation / Common Fund Orders / Contingency Fees • The High Court’s decision on Common Fund Orders (CFOs) in December 2019 caused some consternation amongst industry participants but has not resulted in a wholesale change in the funding of class actions. The implications are yet to be felt on comp
Slide 24: Culmination of Initial Five Year Plan
Culmination of Initial Five Year Plan 1 July 2015 30 June 2020 • This financial year has been Australia, USA, Canada, the strongest in our company’s Increased jurisdictional coverage Australia, USA, UK Asia, UK, EMEA history, with record income of $314.3m and net profit before tax and fair value adj
Slide 25: Next Five Year Plan
Next Five Year Plan • The previous business plan was focussed on diversification. The current business plan is focussed on differentiation. Omni Bridgeway now finds itself as the largest litigation funder in the world and our vision is to be recognised as the global leader in managing and financing
Slide 26: Risk Mitigation
Risk Mitigation Risk Potential impact Strategic response PORTFOLIO Potential for a funded case to be lost = Omni Bridgeway • Deliberate transition from idiosyncratic risk to systemic risk of a portfolio CONCENTRATION investment lost and exposure to adverse costs • Portfolio represents increased numb
Slide 27: Glossary of Terms and Notes
Glossary of Terms and Notes ESTIMATED PORTFOLIO VALUE (EPV) EPV for an investment where the funding entity earns: (i) a percentage of the resolution proceeds as a funding commission, is the current estimate of the investment’s recoverable amount after considering the perceived capacity of the defend
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