Burford Capital posts profit bump as it hits back at critical analyst
London-listed litigation funder Burford Capital today announced that its profit after tax grew 36 per cent to $225m (£180m) in the first half of 2019.
The funder said litigation investment income in the six months to 30 June hit $264m, up 36 per cent from the same period the previous year.
Burford said investment returns increased to a 98 per cent return on invested capital (ROIC) net of losses, up from 85 per cent at the same period the previous year.
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During the first half Burford pledged $751m in new investment commitments, a 36 per cent increase on the same period last year.
The largest commitment in the period was a $130m portfolio financing deal “with a major global business”.
In April broker Canaccord Genuity launched a scathing attack on Burford, and questioned its figures for return on investment capital and its use of unrealised gains in its profit-before tax numbers.
In its interim report today, Burford responded to some of those criticisms in a shareholder Q&A section.
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Burford said firms like Blackstone and KKR also included unrealised gains on their balance sheets.
it said it had a “decade of clean audit opinions and a strong history of unrealised gains turning into realised gains”.
It also hit back at the “derisible suggestion” from “one analyst” that it should compute the return associated with partial resolutions against the cost of its entire investment return on investment capital.
“We do not typically discuss analyst views but we discuss this point because of its deliberately sensationalised dissemination in the market,” the report said.
“We are unaware of anyone computing returns like that in any sector of the financial services industry,” it said.
Burford’s share price fell 1.8 per cent today to 1,639p.