About Burford Capital

Burford Capital Limited (Burford) provides legal finance products and services, comprising core legal finance and alternative strategies; and engages in the asset management business. Products and Services Legal Finance The company's legal finance products and services comprise core legal finance and alternative strategies. Core Legal Finance The company's core legal finance business provides capital and expertise in connection with the three areas of legal activity identified above, namely the underlying asset value of litigation claims and the enforcement of settlements, judgments and awards; the amount paid to law firms as legal fees and expenses; and the value of assets affected by litigation. The company's clients include a number of the world's largest law firms and corporations, and the company's offerings enable them to remove cost and risk associated with legal claims, accelerate the realization of cash from pending claims, increase capital available for other business purposes, recover assets from judgment debtors and/or generally improve risk management while adding budgetary certainty, among other things. In addition to providing capital to clients, the company sometimes acts as a principal. As a general rule, the company's only private funds that deploy capital into core legal finance are BOF, BOF-C and legacy funds, i.e., BCIM Partners II, LP and BCIM Partners III, LP. The scope of the company's core legal finance business is broad and encompasses a wide variety of structures, risk levels and anticipated returns. The company provides capital against the underlying value of commercial high-value single or multiple litigation matters at any stage of the litigation process, from before filing to after a final judgment has been entered. In some instances, the company provides capital to a law firm that has agreed to take a case on a contingent fee or alternative fee basis. In other instances, the company provides capital directly to the corporate client. The company's provision of capital may be limited to funding the costs of the fees and expenses needed to take the matter forward or may also monetize some of the potential future value of a claim by offering a client an upfront cash payment. In return, the company receives its contractually agreed entitlement from the ultimate settlement or judgment on the claim and, if the claim does not produce any cash proceeds or other value, the company generally loses its capital. When the company provides capital for multiple cases for the same client, the company often does so on a cross-collateralized portfolio basis on terms that tend to recognize the lower risk of loss generally associated with multi-case portfolios. As a general rule, the company underwrite each case in these portfolios although, in a limited number of instances, the company may not conduct separate due diligence on smaller cases within these portfolios. Portfolios allow the company to originate larger volumes of assets with greater efficiency, as well as to provide clients financing for cases that could be difficult to finance otherwise. The company also deploys capital in other ways to express a view about litigation outcomes, such as by purchasing securities whose future value may be affected by litigation outcomes or by acquiring assets that are or can be the basis for legal claims. For law firm clients, legal finance allows them to obtain cash to operate their businesses and pay the salaries of their lawyers even when they have taken a case on a contingent fee or alternative fee basis. It also allows law firms that prefer to operate on an hourly basis to compete for contingency or alternative fee work. For corporate clients, legal finance allows them to hire law firms that generally work on an hourly fee basis without incurring those fees. Further, legal finance may enable corporate clients to avoid incurring legal fees as an operating expense, thereby improving their net income metrics, and to boost corporate liquidity by obtaining cash through up front monetization of legal assets that otherwise would not be reflected in their financial statements. As legal finance has become more widely known and as the company has developed more direct relationships with corporate clients instead of through the law firms they engage, the company is sourcing an increasing share of its corporate business directly. The company also provides legal risk management services to help protect clients against certain adverse litigation outcomes, including the risk of being held liable for adverse costs. Burford Worldwide Insurance Limited, the company's wholly owned Guernsey insurer, offers adverse legal cost insurance globally in litigation and arbitration cases that the company is financing as part of its core legal finance business, providing a further impetus for clients to work with the company. Alternative Strategies The company's alternative strategies business is focused on assets that have attractive but lower risk and lower returns than core legal finance, consisting of lower risk legal finance, post-settlement, and complex strategies. Lower Risk Legal Finance The company's lower risk legal finance business focuses on pre-settlement litigation matters with lower risk and lower expected returns than the assets the company include in its core legal finance portfolio. This strategy includes assets, such as cross-collateralized portfolios or mature litigation matters that originate in the Advantage Fund, which provides capital where litigation risk remains but where the risk is anticipated to be lower than core legal finance matters for structural or other reasons. The company is an investor in the Advantage Fund. Post-Settlement In the company's post-settlement business, the company offers clients the ability to monetize post-settlement and other legal receivables. There can be significant delays between the point at which parties to a litigation matter agree upon a settlement and the finalization of and payment under the settlement. Often, those delays are due to the operation of the judicial process, which may require notice periods and fairness hearings before approval of settlements, or a settlement that may include a series of payments over time. In the interim period, both law firms awaiting payment of their fees and clients eager to receive their cash settlements may well find it attractive to secure funding against those expected receipts. In addition, law firms are often looking for funding at various points, particularly towards their fiscal year end when cash is needed to pay partners and employees. In those situations, the company offers the ability to monetize or purchase a law firm's receivables, which typically are high quality. The company provides post-settlement financing through the company's private funds, COLP, BAIF and BAIF II, which are private funds focused on post-settlement matters. Although the company manages each of COLP, BAIF and BAIF II and receive asset management and performance fees, the company is not an investor in COLP, BAIF or BAIF II. Complex Strategies In the company's complex strategies business, the company acts as a principal and acquire assets that are mispriced and for which value can be realized through recourse to litigation proceedings that the company launch. Accordingly, the company is typically the owner of the asset associated with the claim and assert the claim ourselves and manage the claim actively. In most cases, there is underlying asset value to support the company's position, in addition to potential value from litigation proceedings. An example of the company's complex strategies business is in merger appraisal situations, where the company typically takes largely offsetting long and short equity securities positions in conjunction with merger transactions while the company pursues judicial appraisal of the fair value of the acquired company's stock price to determine whether an adequate control premium was offered. The company's complex strategies business has historically been undertaken largely through the Strategic Value Fund, in which the company made a substantial general partner investment alongside capital provided by the limited partners. The strategy of the Strategic Value Fund focused on merger appraisal situations, where the company would typically take largely offsetting long and short equity securities positions in conjunction with merger transactions while the company pursued judicial appraisal of the fair value of the acquired company's stock price to determine whether an adequate control premium was offered. With the onset of the Covid-19 pandemic in early 2020, the company made a strategic choice during the first half of 2020 to accelerate realizations from the portfolio in the Strategic Value Fund to de-risk in light of global financial uncertainty, turbulent market conditions and uncertain judicial speed and engagement. Asset Management As of December 31, 2022, the company operated nine private funds and three 'sidecar' funds as an investment adviser registered with and regulated by the SEC. The company generally conducts its private funds activities through limited partnerships. Each private fund that is a limited partnership has a Burford-owned general partner that is responsible for the management and operation of the private fund's affairs and makes all policy and asset selection decisions relating to the conduct of the private fund's business. Except as required by law, the limited partners of the private funds take no part in the conduct or control of the business of the private funds, have no right or authority to act for or bind the private funds and have no influence over the voting or disposition of the securities or other assets held by the private funds. Each private fund engages an investment adviser. BCIM serves as the investment adviser for all of the company's private funds and is registered under the Investment Advisers Act. In addition, the company operates certain 'sidecar' funds pertaining to specific assets and had three active 'sidecar' funds as of December 31, 2022. A 'sidecar' fund is a pooled investment vehicle through which certain investors co-invest directly in specific assets alongside the company's private funds. The company's interest in such 'sidecar' funds is generally limited to the opportunity to earn incentive fees, if any. Regulation The United States The company is subject to the rules and regulations of the SEC and the NYSE as a public company in the United States. BCIM, a wholly owned indirect subsidiary of Burford, serves as the investment adviser of all of the company's private funds and is registered as an investment adviser with the SEC under the Investment Advisers Act. BCIM, as an investment adviser, is subject to the anti-fraud provisions of the Investment Advisers Act and to fiduciary duties derived from these provisions, which apply to the company's relationships with its advisory clients globally, including the company's private funds that the company manages. BCIM is subject to periodic examinations by the SEC and other requirements under the Investment Advisers Act and related regulations primarily intended to benefit advisory clients. The United Kingdom The UK Financial Conduct Authority (the 'FCA') regulates the company's legacy U.K. insurance business and the company's U.K. insurance intermediation business, this latter ongoing activity being with respect to Burford Worldwide Insurance Limited. The FCA and the London Stock Exchange regulate the trading of the company's ordinary shares on AIM in the United Kingdom. Numis Securities Limited is the company's nominated adviser under the AIM rules, in which capacity it advises and guides the company on its responsibilities and continuing obligations under the rules and regulations of the London Stock Exchange. The FCA also reviews debt prospectuses for the company's retail bonds traded on the Main Market of the London Stock Exchange. Burford Law, the independent alternative business structure law firm that supports and complements the company's asset recovery business, is subject to separate regulations, principally, the Standards and Regulations and the Code of Conduct of the Solicitors Regulation Authority of England and Wales. Guernsey The Guernsey Financial Services Commission regulates the company's insurance business conducted through Burford Worldwide Insurance Limited, the company's wholly owned Guernsey insurer. Burford Worldwide Insurance Limited is licensed to carry on international, domestic and general insurance business under the Insurance Business (Bailiwick of Guernsey) Law, 2002 (as amended). Other Laws, Rules and Regulations The company is also subject to various other laws, rules and regulations, ranging from the UK Bribery Act 2010, as amended, and the U.S. Foreign Corrupt Practices Act of 1977, as amended, to anti-money laundering and know-your-customer regulations in a number of jurisdictions. In addition, the company is subject to a range of the U.S. and international laws, rules and regulations relating to data privacy and protection, including the California Consumer Privacy Act, the California Privacy Rights Act, the UK General Data Protection Regulation, the UK Data Protection Act 2018, the EU General Data Protection Regulation and the DIFC Data Protection Law No. 5 of 2020. Seasonality Historically, the company has closed and funded a disproportionate amount of the company's new business in the second and fourth quarters (year ended December 2022), and particularly in June and December, primarily driven by the business cycle of the company's clients. While there is a certain degree of variability in the timing of resolution of the company's assets, historic trends point to higher realizations in the third and fourth quarters. History Burford Capital Limited was founded in 2009. The company was incorporated as a company limited by shares under the Guernsey Companies Law in 2009.