Traders have been piling into the litigation funding area in the hunt for triple-digit returns however consultants have urged newcomers to pay attention to the dangers available in the market.
Litigation funding has develop into a preferred phase of the choice lending sector in latest months, with litigation funding specialists attracting curiosity from each institutional and particular person buyers. Final month, litigation funding specialist Nera Capital secured a £20m funding from Fintex Capital, and AxiaFunder has seen a big rise in its funding volumes this yr.
In the meantime, non-public credit score fund managers have been inching into the area. Aperture Traders, the choice investor backed by Generali Investments, just lately employed Victory Park’s Luke Darkow to develop and run its first litigation finance technique.
Nevertheless, veterans of the litigation financing market have warned that buyers needs to be made absolutely conscious of the danger of capital loss relying on the result of every particular person lawsuit.
Learn extra: Litigation funder Nera Capital hires monetary providers veteran as CFO
Cormac Leech, chief government of AxiaFunder instructed Various Credit score Investor that AxiaFunder’s funded volumes had been up by roughly 150 per cent in the course of the first half of 2024 year-on-year. Nevertheless, the litigation finance platform has just lately skilled its first losses.
So far, 17 business lawsuits have been absolutely funded on the AxiaFunder platform. Six of those are ongoing, whereas 9 circumstances have been gained and two have been misplaced. Traders have generated returns of between -96 per cent and 175 per cent so far, relying on which loans had been backed.
Learn extra: AxiaFunder sees circumstances funded sooner
