The AIM-listed investment company has revealed it made $1.3 billion in new commitments to legal cases last year, more than treble the level of 2016.
‘Given the growth Burford has experienced, the company intends to hold meetings with fixed income investors. A bond issue may follow subject to market conditions and pricing,’ it said.
Burford has issued three retail bonds on the London Stock Exchange’s ORB market in recent years, with the last raising £175 million in an oversubscribed offer in May 2017. The bond pays a 5% annual coupon and matures in December 2026.
Burford shares jumped over 5% to £11.62 at the signal the company, which takes a cut from payouts of cases it funds, could continue the expansion that has propelled the stock to a 12-fold increase in the past five years.
Today's rise ends a period of weakness since the company reshuffled its management last month.
Phil Dobbin, equity analyst at Jefferies, maintained his ‘buy’ recommendation and price target of £13 for the shares. He said the figures showed a steady increase in single case financing in the second half of the year but a five-fold rise in portfolio finance, which involves multiple claims and therefore is less vulnerable to a single negative verdict.
‘This also implies that Burford and its managed fund are gaining further traction with major law firms and corporates with large legal departments, the gatekeepers to the market, and the main targets of Burford’s marketing efforts,’ Dobbin said.
Invesco Perpetual is the biggest investor in the £2.3 billion company with a 22.7% stake mostly held in Barnett’s High Income and Income funds. Woodford, Barnett’s predecessor, owns 11.4% in his Equity Income fund, according to Thomson Reuters. The stock has been a positive highlight for both fund managers who have endured a difficult 12 months.