Litigation Capital Management:Initiation of Coverage

Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing, with its main operations in Australia and the UK. The company provides funding for litigation in exchange for a share of any settlement and has built a strong track record of supporting winning cases and realising very strong returns on its investments.

LCM has historically made a profit on 89% of the cases that it has funded, and has achieved a nine-year cumulative return on invested capital (ROIC) of 134% and an internal rate of return (IRR) of 78%.

In this report, we argue that LCM is well-positioned to continue to deliver strong returns on its investment portfolio based on:

• Expertise in selecting its investments via a rigorous due diligence process. This has been a major contributor to LCM’s strong returns on its portfolio.
• Strong capital base to support further investment.
• A sourcing pipeline built up over decades of industry experience back to the company’s founding in 1998.

Importantly LCM has achieved growth while maintaining a prudent approach to risk control. This is evidenced in the high win ratio, but also in the company’s conservative accounting approach, which we examine on p7-8.