As the litigation finance industry continues to grow and industry leaders find themselves in an increasingly competitive market, opportunities in emerging markets will represent a top priority for funders to establish a dominant position in new regions. The Middle East stands out as one of the most promising markets for funders, with a growing financial infrastructure and governments looking to modernise their legal systems, opportunities for high value litigation funding in the region will proliferate.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
As the litigation finance industry continues to grow and industry leaders find themselves in an increasingly competitive market, opportunities in emerging markets will represent a top priority for funders to establish a dominant position in new regions. The Middle East stands out as one of the most promising markets for funders, with a growing financial infrastructure and governments looking to modernise their legal systems, opportunities for high value litigation funding in the region will proliferate.
Reporting by Debtwire examines the current state of litigation finance in the Middle East, with a particular focus on the role of funders in distressed restructurings and their acquisitions of non-performing loans (NPLs).
The article highlights Omni Bridgeway’s partnership with the IFC, which created a $100 million investment vehicle that could provide banks with a solution to NPLs. Marjin Flinterman, senior investment manager at Omni Bridgeway, argues that banks saddled with challenging NPLs are turning to funders who ‘are often better equipped to extract value through developing and implementing international recovery strategies.’
Debtwire notes Arabtec and NMC Health as examples of situations which are prompting funders, such as Burford Capital, Omni Bridgeway and Phoenix Advisers, to acquire bad debt and then capitalise on returns from future litigation. Phoenix Advisers’ CEO, Dilip Massand, suggests that by acquiring some of the debt in these distressed situations, ‘one would be able to ‘take a few more bites at the apple’ by getting the [right of first refusal] on the ultimate litigation claims.’
Daniel Hall, managing director at Burford Capital, does caution that despite the interest in these distressed restructurings, ‘there are a lot more people talking about NPLs than actually doing them.’ Outside of NPL-related litigation, there is still plenty of interest from funders in litigation going through common law courts, where cases can generate significant value. Lexolent’s Jonathan Davidson also argues that litigation in the local courts can offer tangible benefits as ‘the proceedings tend to be less expensive, there are less adverse cost consequences and local lawyers, like barristers, are accustomed to working on the basis of fixed fees or retainers.’
