A listed firm will write off nearly £1m after securing the sale of its unwanted litigation finance business.
RBG Holdings, which owns the City firm Rosenblatt, announced to the London Stock Exchange it had agreed a deal to sell Lionfish Litigation Finance to an asset manager.
Blackmead Infrastructure, part of the Foresight Group, will pay £1.07m up-front and potentially pay another £2m depending on the outcome of the four live investments acquired.
RBG said it would report a non-cash loss on the disposal of £980,000, based on another four investments that will not be part of the acquisition.
The RBG board had announced last year it wanted rid of LionFish, a non-core business which finances litigation matters, to reduce its exposure to third-party funding commitments.
The cash will be used for the repayment of an intercompany loan and the rest of the proceeds of the sale will be used for working capital purposes and to reduce the group’s net debt.
The performance-related payout is subject to the successful outcome of cases being acquired. The level of repayment is dependent on the return generated by each case and subject to an arrangement whereby Blackmead, as principal risk taker, will be paid a preferential amount if matters are successful.
Jon Divers, chief executive of RBG, said: ‘We have delivered cash back to the group, reduced our net debt, with the potential to receive additional cash depending on LionFish’s future performance.
‘Our focus is now on driving organic growth from our established legal businesses, Rosenblatt and Memery Crystal, and our M&A business, Convex Capital, which has a growing pipeline of potential opportunities.’
In the group’s annual results for the full year 2022, RBG said the £4.3m losses by LionFish had impacted the overall results and were ‘disappointing’. At 31 December 2022, LionFish had nine investments with £8.3m committed.
Foresight Group is a listed infrastructure and private equity investment manager which has had a co-investment arrangement with LionFish since February 2022.
Operationally, LionFish will remain an independent company run by management team Tets Ishikawa and Tanya Lansky, with general oversight from a new board.
Ishikawa, the managing director of LionFish, said: ‘We would like to thank RBG Holdings Plc for their support in launching LionFish. Although we had originally envisaged the partnership to last for many years, the lessons we learnt together and RBG’s decision to refocus on professional services has given us the opportunity to find a more suitable, long-term and exciting partner.’
Shares in RBG rose almost 13% following the announcement to 30.5p.
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