Therium raises £200m in litigation funding

Therium Capital Management, which funds legal claims, has raised £200m to invest in big ticket litigation in a sign that the sector is becoming increasingly attractive to investors looking for returns that are not tied in to other asset classes.

Litigation funders are companies that meet some of the costs of bringing a legal claim in return for some of the compensation awarded if the claim is successful.

Therium is invested in more than 30 legal cases in the UK and US, including intellectual property claims and lawsuits in sectors such as energy and financial services.

Its cases include the high profile shareholder claim against former directors of Lloyds Group for allegedly misleading investors over the 2008 merger with HBOS.

Neil Purslow, founder and chief investment officer of Therium said: "We are seeing a lot of money coming into established litigation funders and large institutional funds are coming into this space.

"There is a greater track record on legal cases and it is becoming more predictable. Law firms also have more and more interest in litigation funding," he added.

The £200m debt facility - Therium said it believed it was the largest single investment in litigation funding to date - is part of a private fundraising by an unnamed financial services company, which will become an equity investor. The investor bought a 50 per cent stake in Therium from City of London Group for £3.4m, of which £1.7m is cash.

Augusta, another funder that focuses on legal claims brought by small businesses, announced last week it had invested £3m in cases during the first quarter of 2015.

Louis Young, managing director of Augusta Ventures, said litigation funding had become more attractive to family offices and hedge funds over the past year.

"Clients see it as a form of asset finance that does not tie up cash flow and removes or reduces the risk of litigation from their balance sheet; lawyers are both generating new work and retaining matters that would otherwise have disappeared out the door."

Last year Augusta invested in 36 cases and wants to increase that to 150 by the end of the year. It invests between £10,000-£600,000 in cases, which range from professional negligence to breach of contract.

Legal disputes against banks and large companies are providing fertile ground for bringing new legal claims. However, the UK is regarded as an immature market with just seven companies making up the Association of Litigation Funders, the industry body.

Earlier this year Bentham Europe, the London arm of Australia's leading third-party litigation funding business, announced it was backing Tesco shareholders in a group action against the UK's largest retailer, which has come under fire for overstating its profits by £263m.

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