With the litigation funding industry experiencing exceptional growth despite the uncertain economic climate and instability across the globe, the practice is not only attracting specialist funders, but also interest from broader investment firms. As an investment opportunity largely insulated from macro-economic events, funds are increasingly seeking to diversify into the asset class.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
With the litigation funding industry experiencing exceptional growth despite the uncertain economic climate and instability across the globe, the practice is not only attracting specialist funders, but also interest from broader investment firms. As an investment opportunity largely insulated from macro-economic events, funds are increasingly seeking to diversify into the asset class.
An article by Hedgeweek spotlights one such example, as Hedonova, a global hedge fund with offices in Los Angeles and Tallinn, has reported impressive financial growth last year due to its portfolio of alternative investments which include litigation finance. Hedonova saw its assets under management grow from $160 million to $400 million in 2022, whilst reporting an annual gain (post fees) of 32.8%.
According to Hedonova’s website, litigation finance represents a maximum of 10% of its portfolio allocation and has experienced historical returns of 56.8%. The hedge fund has also partnered with traditional funders such as Burford Capital and LegalPay as part of these investments. In 2022 alone, Hedonova’s litigation finance investments generated a return of 58%.
