AxiaFunder launches secondary market for investments in commercial litigation financing
Now users can sell each other case investments under strict parameters.
Image source: Cormac Leech / AxiaFunder.
The AxiaFunder litigation finance platform has launched the first secondary market of its kind, allowing investors to buy and sell investments in business with each other while litigation is pending.
In a letter to clients, AxiaFunder explained that the market would allow investors to shorten the typical two to three year holding periods that commercial disputes take and free up capital if necessary.
Buyers can now access more than a dozen cases already funded through the platform.
“We expect the secondary market to become more liquid over time, which should tend to increase the availability of litigation financing while reducing its cost,” the company wrote.
Considering the sensitivity of commercial disputes, the market will be overseen with rules regarding equal disclosure of information and restriction regarding trading near key moments in a case like court hearings etc.
Potential investors will also be required to sign non-disclosure agreements given the confidentiality of information on the files.
“AxiaFunder will monitor the selling price offered for each investment. The sale price will depend on several factors including the contractual right of the title over time in the event of a successful case; the prospect of success; and the seller’s liquidity and risk preferences.
To date, AxiaFunder has funded 13 cases with funding of around £ 1.9million, with two more cases expected to be closed in the coming weeks, bringing that figure to £ 2.5million.
Five of those cases have ended, with an average annualized return of 55% to investors, and eight are still ongoing, with expected overall returns of at least 20%.