Connecting investors with pre-vetted litigation opportunities in the UK and internationally

Litigation Finance is one of the few truly uncorrelated asset classes with the potential to consistently generate positive returns after taking inflation into account

August 02, 2022
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AxiaFunder is, to our knowledge, the only established litigation platform offering sophisticated high net worth retail, and smaller professional investors, access to litigation investments where most of the gross return is paid to the investor. Research suggests that many of AxiaFunder’s competitors charge higher fees leaving investors with only high single digit annualised returns. By contrast, AxiaFunder targets significant double-digit investor returns, net of fees.

In the last quarter, AxiaFunder launched a new portfolio funding product with two compelling features: automatic diversification and an improved risk reward. So far, £800,000 has been raised for this strategy. The underlying assets, for these first couple of offers, were housing disrepair claims. 85% of investors’ principal was insured. The underlying claims have an expected average duration of 9-15 months with only 5% expected to go to trial. It is envisaged that capital and returns for the underlying 244 cases will be paid to investors as and when each case settles. AxiaFunder uses IT to directly monitor each individual case and thoroughly audits the law firms running the cases on a periodic basis to manage the operational and counterparty risk. 

Given the level of investor demand and the available vetted assets, we see no reason why volumes won’t increase significantly. We expect that our law firm partners can generate over £2m of quality assets per month, and therefore we are optimistic that this investment opportunity can scale subject to investor demand. With equities looking vulnerable, as central banks are focused on restraining inflation, and both bonds and property look expensive in our view, we would anticipate that many investors may view the AxiaFunder product as a logical addition to their investment portfolios.

AxiaFunder vets all cases on 10 criteria: are the underlying merits of the case strong? will the defendant pay? is the claim large enough relative to the cost? is there adverse cost risk insurance? is the claimant’s legal team capable and experienced? is the law firm aligned and incentivised to win the case? is 3rd party funding legal in the jurisdiction? does the case have sufficient financing to the end of trial? is the risk of security for costs properly addressed? are investors being sufficiently compensated for risk? Only cases screen positively on these factors reach the platform for investment.

The AxiaFunder team is confident that the housing disrepair claim portfolios that have been funded in the last couple of months, screen strongly across each of these ten criteria, making them in our view a relatively attractive investment.

AxiaFunder aims to be as transparent as possible to investors, who have signed a confidentiality agreement, and shows the output of its assessment in a detailed 40-page offer document along with a data room for each investment offer. For each investment offer a video profile of the case / cases is presented to investors on the website.

AxiaFunder launched its first cases in 2019 and to date has funded 14 commercial cases of which 6 have resolved positively. While, in finance, historical returns are never indicative of future returns, to date the reported average IRR on resolved cases is 48% per annum. Over the long run, we target investor-returns of 20-30% per annum, net of fees. 

In the last 3 months AxiaFunder funded 244 housing disrepair cases. We expect to expand the product offering into other types of portfolio funding. For the foreseeable future, the platform will offer a combination of higher risk higher return commercial cases alongside a series of portfolio funding opportunities.

While many (often those aligned with defendants!) argue that litigation finance is a form of ambulance-chasing, we are strongly of the view that it is a critical ingredient in a mechanism to protect property rights and helps to make society more inclusive— which can be shown to link to faster GDP growth and higher GDP per capita.

AxiaFunder is an appointed representative of an FCA regulated firm. The investments opportunities are only available to high net worth sophisticated retail investors and professional investors, given the complexity and risk of the product.

The AxiaFunder team comprises 3 senior lawyers each with many years of post-qualification experience and an investment banker with over two decades of markets and investment research and structuring experience (across derivatives, equities and private debt) at leading institutions.

Each offer is structured as a separate class of a tax-transparent limited partnership.

The offers can be accessed via https://www.axiafunder.com/investments by eligible retail investors in most countries.

Capital at risk. Returns not guaranteed. There is a significant risk of losing your entire investment if the case fails. Please read the full risk warning before deciding to invest.
The investments offered by AxiaFunder are relatively complex and relatively high risk. For regulatory reasons they are only suitable for Sophisticated High Net Worth Investors.