Litigation fund Burford raises dividend after profit doubles

By Clare Hutchison

LONDON (Reuters) - Burford Capital <BURF.L>, a London-listed fund that finances lawsuits in return for a cut of any payouts, said profit doubled in 2012 as several of the cases it invested in came good.

The company, which competes with Juridica <JIL.L> in the United States and Britain, plans to raise its dividend for shareholders by one third reflecting a strong outlook.

Litigation finance has gained a higher profile in recent years as companies turn to the courts to deal with business failures, allegations of fraud, whistleblowing and patent disputes.

"We're obviously feeling very positive about the results, about the business and the industry as a whole," Burford Chief Executive Christopher Bogart said on Thursday.

Pretax profit excluding the impact of an acquisition, jumped to $34.1 million (22.1 million pounds) from $16 million a year earlier. The company plans to raise its dividend to 4.76 cents per share from 3.66 the previous year.

Burford's shares, which have climbed almost 14 percent so far this year, were up 3.6 percent at 106 pence at 4:05 p.m.

The company, which has $300 million under management, said 12 litigations finished last year, generating $47 million in gross investment recoveries, a return of 61 percent. That was more than the previous two years combined.

It said it has a further $53 million in gross payouts pending and a strong pipeline of nine legal cases that it has committed $72 million to.

"We believe that both the deployment and investment recoveries should continue to grow strongly in 2013 and beyond," RBC Capital Markets analysts said in a note to clients.

Burford has recently sought to smooth out the effect that long-term and unpredictable litigation can have on its revenue stream by funding more than one case for a single client.

"When we have corporate clients show up and want much more capital than a single case, and want to spread that capital across a portfolio of ten cases that's very interesting for us, both on growing the business and diversifying the risk," Bogart said.

Burford declined to name its clients or the cases it is funding, citing legal reasons.

The company is discussing with shareholders, which include Invesco Perpetual and Baillie Gifford, how to adapt its capital structure for its new set-up, Bogart added.

It also entered the UK market last year after acquiring Firstassist for $18.75 million on a cash-free, debt-free basis. Bogart said in its first 10 months, Firstassist, now called Burford UK, has generated $11 million in profit before tax.

(Editing by Erica Billingham)