Burford to buy rival GKC for £160m

14th Dec 2016 08:22

(ShareCast News) - Shares in legal finance firm Burford Capital soared nearly 12% as it announced it had agreed to buy rival GKC Holdings, a law-focused investment manager, for $160m in cash and loan notes.A further $15m will be paid depending on GKC contributing $100m in income.Of the $160m, $93.75m will be paid in cash, $43.75m in three-year notes and $22.5m in 3.69m shares (which, all but 177,605 shares are subject to a three-year lock up).GKC Holdings, the parent of Chicago based legal advisory company Gerchen Keller Capital, is registered with the US Securities and Exchange Commission and has $1.3bn assets under management with a news $300m plus fund being raised. In 2016 GKC has income of $15.4m and operating profit of $9.1m.The acquisition is expected to be immediately accretive to earnings and two companies combined have committed to more than $2bn worth of investments since their respective inceptions. Their current portfolios will have a combined total of more than $1.2bn in investment assets and commitments.Burford's chief executive Christopher Bogart, said: "Burford and Gerchen Keller are widely regarded as the world's two leading litigation finance providers. We know each other well and we approach the legal market in similar ways. The opportunity to combine the largest public player and the largest private capital manager is unique and will create the clear leader in this rapidly growing and evolving industry."Burford's public shareholders will benefit from a larger, high quality team generating a broader array of investment opportunities and the addition of a significant flow of predictable management and performance fee income. Gerchen Keller's investors will benefit from expanded investment opportunities through the addition of Burford's experienced team and our extensive track record."Shares in Burford were up 11.56% to 535.50p at 1012 GMT.