Listed firm Rosenblatt’s parent company has today announced a £20m investment arrangement between its litigation funding business and a large alternative investment firm.
RBG Holdings said LionFish Litigation Finance – which finances litigation matters being run by solicitors outside the group – has reached the agreement with an unnamed investment firm, which will participate in all of LionFish’s litigation investments.
The arrangement will provide LionFish ‘with significant additional capital flexibility in the investments it makes, allowing it to manage a more diversified and granular portfolio of risks off balance sheet, as well as to move away from the investor sales model currently being used to reduce risk’, according to a statement to the London Stock Exchange.
The investment firm will invest up to 75% in each of LionFish’s investments across the portfolio over two years and LionFish will be entitled to receive ‘a significant share of the returns of the arrangement after a high single-digit return hurdle has been met’, RBG Holdings said.
It added: ‘LionFish will have sole discretion in terms of which investments to pursue within a broad set of agreed parameters (similar to LionFish’s current investment parameters).
‘The focus of the arrangement will be on maintaining LionFish’s highly selective, quality-focused investment standards, without any undue deployment pressure.’
RBG Holdings’ chief executive Nicola Foulston said: ‘This arrangement is a significant development in LionFish’s long-term growth, and a validation of our decision to enter the third-party litigation funding market.’ She added that it will ‘support our move away from our current model of selling participation rights in cases to investors’.
LionFish’s managing director Tets Ishikawa said the move ‘increases our capacity to invest in litigation funding without falling back on a low-margin, deployment-focused fund management model’.
‘The arrangement allows us to diversify our own investment book and enhance the return profiles from our core investment business,’ he added. ‘This sets up LionFish for an exciting and profitable period of growth.’
Shares in RBG Holdings rose 1.49% to 126.35p by lunchtime.
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