The New York Stock Exchange in New York on June 17, 2020. Photo: Michael Nagle/BloombergLitigation funding giant Burford Capital might have dreams of being traded on the New York Stock Exchange, but don’t expect other litigation financiers rushing to follow them.
Burford on Tuesday announced it had filed paperwork with the U.S. Securities and Exchange Commission in order to be listed on a U.S. stock exchange. What happens next, according to the firm, is a confidential review that’ll take months to play out.
Getting listed on a U.S. stock exchange would grant Burford more access to capital as well as different sources of it, said William Farrell, the managing director and general counsel of Longford Capital Management, a Chicago-based litigation financier that competes with Burford.
Despite this, don’t expect Longford and others to follow in Burford’s footsteps, Farrell said. That’s because Longford and Burford are using different models to raise money, he added.
“We are not considering going public and listing on the New York Stock Exchange,” Farrell said. “We like the private model and we think there’s advantages to that.”
If it is traded on a U.S. stock exchange, Burford will be able to tap into a new cohort of investors who never would have backed the litigation financier if it wasn’t for the stock exchange, Farrell said. However, Burford might also face pressure to post good results every quarter, which is something a private company like Longford doesn’t need to worry about, Farrell added.
Burford’s announcement “caused us to consider the advantages and disadvantages, and reaffirmed our preference to being a private model, being privately owned,” Farrell said.
The firm’s possible ascendancy to a U.S. stock exchange is a welcome development for the litigation-financing industry as a whole, said Charles Agee, the chief executive officer of Westfleet Advisors, which advises companies and law firms that are interested in obtaining litigation funding.
Having the largest litigation financier in the world become a publicly traded company on the New York Stock Exchange would serve as “validation” for the industry, Agee said. However, he doubted that Burford’s application to the SEC would be the start of a trend because there are different litigation-financing models in play.
Farrell noted that Burford was already a publicly listed company—its stocks are already trading on the London AIM, which is a submarket of the London Stock Exchange. Burford’s announcement comes six months after it first teased the possibility of getting on the New York Stock Exchange or the NASDAQ for its ordinary shares to be traded.
Farrell said the differences in the public and private models of litigation financing are not apparent to its customers.
“I would imagine that the customers, our users, really don’t know or care that much about our corporate form of structure,” Farrell said.
Burford, which is being represented by attorneys from Cravath, Swaine & Moore, declined to comment for this article.
Burford saw its revenue drop by 15% and its operating profits plummet by 21% in 2019. But in an interview with The American Lawyer, Burford’s CEO touted the fact that it deployed over $1 billion for the third straight year, and was looking to take advantage of the economic chaos being caused by the ongoing COVID-19 pandemic.
“We have significant cash on hand in addition to our proven cash generating capacity and access to hundreds of millions of dollars of fund capital to boot,” Burford CEO Christopher Bogart said in an April 28 statement. “And much as we share the world’s distress at our current health crisis, the reality is that we expect its aftermath to be a time of significant demand for our services and a moment when uncorrelated cash flows are especially attractive.”
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