Shares in Litigation Capital Management Ltd (AIM:LIT) dropped 26% in mid-morning trade on Thursday after the company announced a court defeat in one of its funded cases and flagged a sharp slowdown in investment returns in the second half of the financial year.
The High Court in London ruled against LCM’s client in a commercial dispute, resulting in a write-down of the company’s share of the investment. LCM had committed £3.4 million of its own capital to the case, alongside a further £8.2 million from its Fund I vehicle.
The position was marked at £5 million on the balance sheet as of December. Adverse costs are covered by insurance, and the company is considering its next steps.
Outside of this ruling, LCM said the second half of the year saw just A$3 million in proceeds from realised investments, against A$5 million deployed, generating a multiple of 0.6x. That compares to a strong 3.7x return in the first half.
Net debt has risen to A$73 million, while new investment commitments for the year have dropped to A$80 million. The firm has paused marketing for its next fund amid regulatory and political uncertainty in the US.
The shares fell 12.25p to 32.5p.