IMF Bentham Limited Annual Report 2019

Chairman’s and Managing Director’s Report continued Competitive Landscape Lured by the potential for profitable returns, the global funding market is growing. There are now a large number of litigation funding entities active in our geographic markets. Consequently, the aggregate funds available and number of funded cases have also grown significantly. Funding entities today range from publicly-listed, global companies like ours to a plethora of domestic, private entities or other investors in litigation such as hedge funds, private equity firms, family offices, ad hoc investors and contingency law firms utilising a variety of funding strategies. For us, being a third-party dispute resolution financier is about much more than collecting and deploying capital, and more nuanced than the private equity model of involvement. – – Significant Capital We have significant capital to finance large single disputes and portfolios, all the way through trial if required. This is essential to being a viable competitor in today’s funding arena. We have grown our Funds Under Management to approximately A$1.9 billion this year, giving us one of the largest war chests in the global funding industry. Claimants, law firms, judicial bodies and opposing parties all know that we are good for the money. Our capital reserves bring comfort and confidence to our funded clients and their legal advisers and engender respect amongst our legal opponents. Furthermore, our funds are predominantly managed off-balance sheet, minimising the financial exposure of our business. – – Strategic insights and project management Our model is based on the proposition of bringing value to each investment by way of strategic case insights and, in many jurisdictions, assistance with project execution. Not only does this help safeguard our investments, but, importantly, it helps maximise returns for funded parties. Deploying cash with limited involvement may suit the recourse-lending model of the finance sector, but dispute funding is a specialised field traversing finance and law. Deploying funds without ensuring each dispute has a winning strategy would be flawed underwriting, in our opinion. Good litigation strategy and execution can mean the difference between winning big or losing everything. – – Investment wisdom Few (if any) competitors can claim an 89% success rate over 18 years. Even fewer can demonstrate average returns of 63% to their funded parties over such duration. We have achieved these results because our Investment Managers who identify and recommend investments, and our Investment Committee who vet each recommendation, have hundreds of years of cumulative wisdom in law, finance and business. These former judges, attorneys, and business leaders are at the heart of our investment savvy, and their expertise cannot be replicated. Without equivalent expertise, funders seeking to participate in this market are bound to make calamitous mistakes and are unlikely to survive. – – Global footprint Successful dispute investing today requires a global footprint. Not only are disputes increasingly international in nature (with multi-national parties, geographically dispersed assets and international laws), but geographic diversification is also an essential element to a de-risked total investment portfolio. Our talent is dispersed across 14 locations in six countries. Our Investment Managers, leadership and support teams are permanently deployed throughout the globe to identify quality investments and guide them to fruition. We are neither remote nor fly-in-fly- out transients. We coordinate across our global network to identify market trends, share learnings, insights and tools, achieve efficiencies and harness opportunities together. We have regular forums to cohere us in our common goal. When all is considered, there are very few market participants left in our competitive realm. Nevertheless, we are never complacent or arrogant. We continuously scan our competitive landscape, analyse the operations of industry participants, deconstruct their strategies, calibrate and recalibrate our own strategy where needed. 34