LONDON (ShareCast) - (Sharecast News) - Litigation Capital Management reported a challenging second half of its financial year on Thursday, after the High Court in London ruled against a funded party in a commercial litigation case and overall realisations remained modest.
The AIM-traded firm said the case, co-funded by LCM and its Fund I vehicle, saw it contribute £3.4m and Fund I invest a further £8.2m.

As of 31 December, the investment was recorded at a fair value of £5m.

LCM said any adverse costs were covered by after-the-event (ATE) insurance and that it was now reviewing the judgment with its legal partners to assess next steps.

In a trading update for the financial year ending 30 June, the alternative asset manager said it recorded realisations of AUD 3m (£1.44m) against invested capital of AUD 5m in the second half, equating to a modest 0.6x multiple.

That compared with a 3.7x multiple in the first half, when realisations totalled AUD 52m on AUD 14m invested capital.

For the full year, realisations stood at AUD 55m on AUD 19m invested, for a multiple of 2.9x.

Those figures excluded the disputed UK case, as well as three others - Queensland Electricity, Quintis, and a commercial arbitration claim - that remained subject to appeal or potential appeal.

Net debt was expected to rise sharply to around AUD 73m as of 30 June, up from AUD 8.9m a year earlier, reflecting continued deployment into active cases and lower-than-expected cash inflows.

The company said it had also temporarily paused active marketing of its upcoming Fund III, citing uncertainty around proposed US tax changes and political developments affecting some institutional investors, including university endowments.

While LCM noted it had no direct exposure to the tax proposals, it said it intended to resume marketing efforts in late 2025 or early 2026, once the regulatory environment was clearer.

New commitments for the 2025 financial year were expected to total about AUD 80m, significantly down from AUD 270m in 2024.

The firm said the reduction reflected both the pause in fundraising and the board's renewed focus on balance sheet discipline in light of recent trial losses.

"This has been a challenging period for LCM, marked by a small number of adverse case outcomes," said chief executive officer Patrick Moloney.

"While the recent trial losses are clearly disappointing, we are actively applying the lessons learned to further strengthen our investment and risk processes.

"Our long-term confidence in the fundamentals of the dispute finance sector, and in LCM's differentiated model, remains intact."

The board said it would provide a full strategic update with the company's annual results in September.

At 1449 BST, shares in Litigation Capital Management were down 30.5% at 31.1p.

Reporting by Josh White for Sharecast.com.

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