IMF Bentham Limited Annual Report 2018

Capital Diversification In February 2017, we established Bentham IMF 1 LLC (“Fund 1”) solely for US investments. This year, we sold the majority of our US investment portfolio to Fund 1 and, at the same time, upsized Fund 1 to US$166.3 million (with the potential to upsize further in future). The upsized Fund 1 provided additional capital for US investments without creating significant adverse deployment pressure. This capital markets strategy converted the risk in our US investments from balance sheet to a portfolio and converted intangible assets to cash, enabling the cash to be deployed elsewhere. Options for use of the remaining sales proceeds include retiring debt, retaining cash for management of existing large idiosyncratic risks, expansion into Europe, or return of capital. In October 2017, we launched two new investment vehicles: IMF Bentham (Fund 2) Pty Ltd and IMF Bentham (Fund 3) Pty Ltd. The two new funds, collectively known as the Rest of World (“RoW”) Funds, provide non- recourse leveraged capital for funding investments in jurisdictions outside of the US. The RoW Funds will underwrite investments in Australia, Asia, Canada and Europe, and have a combined capacity of $150 million. Although these decisions have had a short-term impact on our profitability our long-term strategy should enable us to more efficiently fund future growth and increase our Return on Equity and Return on Assets. Given the rate of commitment in both Fund 1 and the RoW Funds, our focus for FY19 will be to launch new funds for investments before we reach capacity in the existing funds or the expiry of the Commitment Periods. Each of these initiatives reflects our transition from investing entirely on our own balance sheet to investing in, and managing, fund structures and increasing our capital resources to grow our investment portfolio. Funding Applications (number of applications) Consolidated Australia USA Canada Asia Europe Financial Year 0 100 200 300 400 500 600 700 800 900 446 12 301 170 309 264 669 104 59 827 866 127 7 55 26 345 FY18 FY17 FY16 FY15 371 356 302 Overview Financial Report Shareholder Information 5 Directors’ Report IMF Bentham Limited Annual Report 2018