19th Jun 2025 13:07
(Alliance News) - Litigation Capital Management Ltd shares plunged on Thursday as it reported a "challenging period" due to adverse case outcomes after a judgement at the high court in London found against a party it had funded.
Shares in Litigation Capital Management were down 27% at 32.50 pence in London on Thursday afternoon.
The Sydney-based asset manager and provider of dispute financing said it contributed GBP3.4 million of its own capital to the party, with a further GBP8.2 million invested from Fund I.
At the end of December, the investment was recorded at a fair value of GBP5.0 million on its balance sheet.
The company said it is reviewing the judgement and assessing potential next steps alongside the funded party and legal representatives.
In a trading update, LCM said it has recorded two successful investments and two unsuccessful investments in the second half of the financial year.
This excludes the latest judgement and a previously announced commercial arbitration claim, which are subject to appeal processes.
"This has been a challenging period for LCM, marked by a small number of adverse case outcomes. While the recent trial losses are clearly disappointing, we are actively applying the lessons learned to further strengthen our investment and risk processes," said Chief Executive Officer Patrick Moloney.
LCM also said it has decided to pause active marketing of Fund II due to "uncertainty surrounding potential tax changes in the US litigation market, as well as political developments affecting certain institutional investors, notably US university endowments".
It expects to resume marketing for the fund in late 2025 or early 2026.
In light of this change, LCM said it expects new commitments for the 2025 financial year to be AUD80 million, down 70% from AUD270 million a year ago.
"We are very pleased with the interest and enthusiasm shown to date by key investors. Our long-term confidence in the fundamentals of the dispute finance sector, and in LCM's differentiated model, remains intact," CEO Moloney said.
LCM said it will provide a further update with its full year results in September.
By Michael Hennessey, Alliance News reporter
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