Burford Capital closes new $500m litigation finance fund

The highly successful investment manager has a new strategy and plenty of investor demand.

Burford Capital has closed a new $500m fund to invest in litigation-related complex strategies.

The New York-based company has a top performing investment trust listed on the London stock market that funds third party lawsuits.

The new fund will invest in assets that Burford believes are mispriced and litigation and regulatory processes.

Burford will act as a principal as opposed to financier. The fund has already invested more than $100m contemporaneous with its closing. Burford regards its investment strategies as proprietary and will not release information about its underlying investment strategies.

The firm will rely on its existing team but has also expanded by hiring a dedicated portfolio manager, Matthew Schoenfeld, formely of Driehaus Capital and Morgan Stanley’s Special Situations Group.

The new fund is structured as an evergreen fund with a perpetual life based on continued LP commitments. Investors in the fund will pay Burford a management fee of 2 per cent per annum on drawn capital and a performance fee of 20 per cent of fund profits on each resolved investment, subject to a 5 per cent per annum priority return to investors, after which the Burford performance fee will receive a traditional general partner catch-up.

Burford has committed $150m to the new fund from its own balance sheet (a commitment on which it will not pay fees). Burford’s employees have also personally invested more than $5m in the new fund. Thus, the amount raised from third-party investors on which fees will be paid is nearly $350m.

Adam Gerchen, Burford’s President who will oversee the activities of the new fund, said:

“We are delighted to broaden Burford’s investment activities with this new fund. Institutional investor demand for allocations to the new fund was robust, and we are grateful for the support we received.”

“With Burford’s co-investment, we believe that the alignment of interests will well serve both Burford’s shareholders and the fund’s investors.”