Burford Capital unveils record profits; shares rally

13th Mar 2019 12:45

(Sharecast News) - Litigation funder Burford Capital - AIM's biggest company - saw profits rocket by nearly a quarter last year following a "sea change" in the legal market.Burford, which specialises in litigation finance, risk management and asset recovery, as well as providing advisory activities, said 2018 operating profits had come at $354m, a 23% hike. Income rose 23% to $420m.Returns on invested capital in the core litigation finance investment portfolio rose to 85%, net of losses, compared to 2017's figure of 76%. New investment commitments were $1.3bn, with deployments of $1.1bn.Christopher Bogart, chief executive, said: "The big question this year was whether 2017's explosive growth was a one-time anomaly. These results show that it was not."Burford has committed $2.6bn to new investments in just two years, more than twice its lifetime cumulative commitment level prior to that time. That is extraordinary and suggests a sea change has occurred in the legal finance market place."We also continued to grow, so that we now field a team of more than 110, including 55 lawyers."Ben Williams, analyst at Liberum, said: "Returns achieved are the highest in the firm's history, despite the competition. The case that this is the winner in a growth industry is much tougher to assail now."Canaccord Genuity said the results were above consensus and showed "another year of impressive growth year-on-year". But it added: "However, they do not change our view that as the business matures and deploys increasing levels of capital into alternative business lines, the return on invested capital achieved and hence the return on equity on moderate."As at 1245 GMT, shares in Burford were ahead 6% at 1,930p, giving the group a market cap of well above £4bn.