Burford, which at £4.2bn is the biggest company on London’s AIM market, saw net profits hit US$328mln in 2018 (2017: US$265mln) – comfortably above what analysts had expected.
Income jumped by a similar percentage to US$420mln (2017: US$341mln), driven by a 22% increase in income from investment to US$389mln (2017: US$318mln).
Burford poured more than US$1bn into buying up new claims last year as demand for its financing continued to rise.
Assets under management in the investment management business increased to US$2.5bn (2017: US$1.7bn), which includes a US$1bn capital injection from a sovereign wealth fund.
2017’s explosive growth was not a one-off
Unsurprisingly given the forecast-busting results, bosses have decided to hike the annual dividend by 14% to 12.5 US cents (2017: 11.0 US cents).
“The big question this year was whether 2017's explosive growth was a one-time anomaly,” asked chief executive Christopher Bogart. “These results show that it was not.”
“Burford has committed US$2.6bn to new investments in just the last two years, more than twice its lifetime cumulative commitment level prior to that time. That is extraordinary and suggests a sea change has occurred in the legal finance marketplace.”
City broker hikes price target
City broker Liberum repeated its ‘buy’ rating as it hiked its price target up to 2,470p from an already-bullish 2,300p.
“Returns achieved are the highest in the firm’s history, despite the competition,” said analysts in a note to clients.
“The case that this is the winner in a growth industry is much tougher to assail now. We note 41 employees putting US$6m of their own money into Burford funds. Follow them.”
Shares rose 5.2% to 1,912p on Wednesday morning.