Raising the bar

Identifying a gap in the market, Howard Nicholson of Centaur Asset Management talks to Mena FM about the firm’s new legal financing litigation fund – and the growth prospects this concept may find within the Mena region

howardIt is becoming a well known fact that investors are starting to demand, among other  things, diversity within their in- vestment prospects.  With several different asset classes finding themselves

in favour for  an  abundance of  reasons,  litigation funds are becoming more popular with investors bases – not simply because legal fees can be the highest of  costs to day business. To  find out more about one firm   that is  taking advantage  of  this avenue, and the Mena orientated prospects

Review Panel who assess the criteria of  a case, which involves criteria such as the presence  of   ‘after   the  event  insurance’ (ATE  insurance), pecuniary loss insurance and a QC’s  opinion (a 60-65%+ chance of winning the case). Centaur would also take account of  the commercial circumstances of  the case and the recommendation from the Litigation Review Panel and if  everything checks out then the case may very well  become funded. These cases could be situated within the UK courts between two UK parties or completely outside of the UK (that said we  would generally look for  cases in  jurisdictions that  follow English law, such as commonwealth countries, or  inter- national law). While not  focusing  on   any one particular area of  the law,  we  mainly look for  two different types of  cases. The first is  what we  would call  a non-litigious case, which may well have had a decision in the courts which applies to numerous other similar cases. The  second type of  case we look for would be a litigious case, which are

HOWARD NICHOLSON, chief operating officer, Centaur Asset Management of  such a fund, Mena FM talks to Howard Nicholson, chief operating  officer of  Centaur Asset Management.

Mena FM (MFM):  Firstly, what is the investment strategy?

Howard Nicholson (HN): The  Phoenix Legal  Financing Fund I (“Phoenix”) is a legal financing litigation fund, meaning that any money raised by  Phoenix will  be used to fund legal cases and disputes (such a case may well  be in  the UK or  outside  the  UK under international law). Centaur’s investment strategy involves identifying cases that Centaur assess to have a certain percentage  chance  of    winning/success. Part of   Centaur’s case selection process involves the  input of  Centaur’s Litigation  the kind expected to go to court but where we  would hope a settlement could be negotiated before matters got that far.

MFM: Why is the fund unique and what are the key features?

HN: Phoenix is different to a number of the others that are out there in the market right now. Most of  the other funds are closed ended funds and not available to retail or private investors. Phoenix is an open ended fund and is available to both retail/private investors  and  institutional investors.  The fund itself is capital protected through the various layers of insurance protection, thus offering an  alternative asset class that has the added advantage for  those interested in   capital  appreciation  benefits.  One  of


the unique products we  are working on   at the moment is  a Shariah version of  Phoenix, which will  be called the Phoenix Shariah Legal Financing Fund II  (“Phoenix Shariah”) . Phoenix Shariah hasn’t launched yet but  we are hoping to  launch in  March and are in  the final  stages of  selecting a Shariah board.  Essentially, Phoenix Shariah  will  operate  with the  same sorts of   investment  principles  while operating   under  Shariah  principles. We  believe Phoenix Shariah would be the first  of its  kind in terms of a litigation fund for  the Shariah Investment market. The   plan is  to focus capital raising for  Phoenix Shariah across the Mena region, and the concept has already generated considerable interest from both high networth  individuals (HNWI) and institutional investors.

MFM:  How has capital raising been received so far?

HN:  So   far,   capital raising has been fantastic as we’ve already had a great reaction to the fund from investors, both in response to the general concept of  the fund and to the Shariah plans for  expansion we  have as well. Capital protection is an  attractive aspect  to our offering as,   while other funds may offer different returns and different strategies  within their portfolios, we   do eliminate the risk  with our capital protection policy.

MFM:   What  has  the  fund  performance been like  so far?

HN:  Phoenix launched  in  November  2012  and we  already have a return of 4.25% for  the first  two months, which is quite remarkable in this current climate. Therefore this makes our annual return targets of 12-18% per annum for our investors increasingly achievable, which we  hope to be able to surpass. In relation to building the business up, we   had to overcome the challenges any business would have to tackle in its infancy, but we  made sure to cover as many of  these issues as possible before launch.

MFM: Who is the target market?

HN:  Our  target market encompasses HNWI   and  institutions who  recognise the  returns  and  advantages  of the concept Phoenix offers – and this will  be the same market we  will  aim for  within the Shariah space  as well. Within Phoenix, we  have six share classes, which are split into two main categories (retail and institutional), which are then sub-divided into different currencies.

MFM: What are your expectations for 2013?

HN:  For the end of  2013,  we  want to be meeting our return expectations of  12-18%; both the existing fund and the Shariah version. In terms of  possible upcoming challenges, we  are constantly keeping our eye on  the horizon for  any possible developments. For example, in  the UK, Lord Justice Jackson’s package of  civil  justice reforms are to be implemented in April 2013. While there is still much detail to be provided, we expect it to raise the issue of clients examining where their case funding  comes  from, allowing them to look at all their options closely and giving greater opportunity for litigation funders.

About Centaur Investments

Centaur Investments is the brand of Centaur that offers structured investment products from Centaur’s bond and fund platforms for private, corporate, and institutional investors.

About Centaur Investments

Centaur Investments is the brand of Centaur that offers structured investment products from Centaur’s bond and fund platforms for private, corporate, and institutional investors.

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