Investors tell loss-making legal fund to wind down
Legal finance fund Juridica Investments is winding up its operations after a 60% slump in its share price this year.
Legal finance fund Juridica Investments (JIL) has bowed to shareholder pressure and agreed to wind up its operations after a 60% slump in its share price this year.
The AIM-listed, Guernsey-based investment company said it would make no further investments in legal cases and would return money to shareholders as its existing portfolio matured.
Its board has begun a review of all costs and fees to ensure investors get the most from the proceeds of the gradual closure.
Launched in December 2007 to provide finance for legal cases, Juridica initially did well from the settlements it collected but over five years shareholders lost 25% after suffering two setbacks this year.
This week it revealed it would only receive $2 million from a successful US trade dispute it had backed, less than the $3.5 million it had invested and far less than the $9.4 million valuation it had recently placed on the case.
In June it was forced to wipe nearly $30 million (£19 million) off its portfolio after an anti-trust case it was financing failed in the US Court of Appeal.
Juridica’s net asset value has fallen 20% this year to £94 million, or 84.7p per share. However, its shares have plunged further as shareholders, which include Invesco Perpetual, Baillie Gifford and Jupiter Asset Management and activist investor Crystal Amber, have lost confidence, valuing the company at just £60 million.
Chairman Lord Brennan said: ‘Both the board of Juridica and its investment manager acknowledge that scale and diversity are now required in order to invest successfully in this asset class, which is not achievable under the company’s existing structure.’
The shares fell 23% this week to close yesterday at 51p, a discount of nearly 40% below NAV.
Juridica’s demise leaves the £390 million Burford Capital (BUR) as the only listed legal fund left.
Legal settlements attracted institutional investors because their returns were not linked to the stock market and so offered diversification. However, Numis Securities said the market suffered from a lack of transparency over valuations.
‘In our view, there may be potential upside given the fund’s large discount to NAV, although we find it hard to assess the true risk/return in this asset class,’ it said.
Source: CityWire – Investors tell loss-making legal fund to wind down
