Top Stocks 2013 by Martin Roth

Author:Martin Roth
Language: eng
Format: epub
ISBN: 9781118406267
Publisher: Wiley
Published: 2012-08-15T00:00:00+00:00

Sydney-based IMF is a business that provides funding for legal claims and related services. Most cases involve class actions against corporations with a claim size of over $2 million. IMF generally pays all fees and other costs, and in return takes a commission — usually between 20 per cent and 45 per cent — of any settlement or judgement proceeds. In October 2011 it launched a new business in the US, Bentham Capital.

Latest business results (June 2012, full year)

IMF posted another superb result, with a further surge in profits, thanks to the resolution during the year of nine cases, realising a net income of $70.5 million, nearly double the figure of the previous year. One case, against Centro companies for misleading investors, provided $41.8 million of the net income. Two other cases each provided net income of around $10 million. The company also incurred a loss of nearly $5 million when it lost one case. During the year the company started four new cases with a total claim value of $58 million. This compares with eight new cases launched in the previous year with a claim value of $360 million. At June 2012 it held a portfolio of 25 cases with a claim value of $1.23 billion, down from 33 cases with a claim value of $1.78 billion a year earlier.

Outlook

IMF is Australia’s largest litigation funding business, although it is facing competition from other smaller entrants to this market. In the 11 years since its public listing it has completed 137 cases, generating revenue of $1.2 billion, including $400 million for the company. Of these cases, 93 were settled, 27 were withdrawn, 12 were won in a court judgement and five were lost. The ability to pick cases with a strong likelihood of success has been a key factor in IMF’s growth. Of its outstanding cases at June 2012 it believed at least six, with an estimated claim total of $585 million, could be settled during the June 2013 year. Despite what appears to be booming business for IMF, its income can vary greatly from year to year, depending on the timing of claim resolutions. In addition, as the litigation funding business grows in Australia, IMF faces the possibility of new government regulations on its activities. It sees its entry into the huge US litigation market as an enormous growth opportunity. Its new subsidiary, Bentham Capital, successfully funded its first case in May 2012, although the matter has gone to an appeal court. In Australia IMF is examining a number of major litigation funding opportunities, including the possibility of support for victims of the January 2011 Brisbane floods, against operators of the Wivenhoe Dam.

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