Litigation funder Bentham IMF Ltd (ASX:IMF) is the pre-eminent litigation funder operating in Australia and has the largest share of litigation funding business in Australia. Bentham provides funding on a contingency basis to businesses and individuals and in return receives a share of the amount awarded to the client where successful.
Bentham has a competitive advantage over its competitors due to its superior risk mitigation process in selecting cases and case management expertise. This is reflected in the company's results, over the past 12 years Bentham has only lost 4% of cases (out of 155 cases). Over the past 13 years, the company has averaged an impressive 185% return on funds invested in each case (including lost cases).
Bentham looks set for strong growth over the next five years and has identified major growth opportunities both domestically and overseas, including:
- Confirmation it will fund its largest ever case (the Wivenhoe Dam case);
- Entering into a joint venture arrangement to fund European litigation, focusing on the UK and the Netherlands markets;
- Continuing its expansion into the lucrative United States market.
Bentham now has a large investment case portfolio of $2.2 billion as at 31 March 2014, the portfolio's returns are expected to be realised over the next three years. As a result earnings should be significantly higher over the next three years than those achieved in FY13. Trading on a price earnings ratio of just 17 times FY13's earnings, the shares are cheap. Bentham also pays a very attractive dividend yield of 4.9%, which also looks set to increase over the coming years.
