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Sydney-headquartered global litigation funding and financing group Omni Bridgeway (ASX: OBL) has successfully completed a $320 million transaction with Ares Management Corporation (NYSE: ARES) to acquire a majority stake in its continuation fund.
Omni Bridgeway is currently co-funding a Baker McKenzie-led class action against Medibank (ASX: MPL) over its 2022 data breach, class actions over alleged sexual discrimination at BHP (ASX: BHP) and Rio Tinto (ASX: RIO), and an action involving alleged miscalculations of entitlements to members of ESSSuper.
The company, formerly known as IMF Bentham, was also instrumental in past class actions against the likes of Bellamy's, Sirtex Medical, UGL, Murray Goulburn, Treasury Wine Estates (ASX: TWE) and more.
Class actions represent around 19 per cent of its legal portfolio, with other key areas including single party claims (21 per cent), enforcement (19 per cent), arbitration (13 per cent), and group claims (12 per cent).
Towards the end of last year, the group announced Ares would be acquiring Omni Bridgeway's co-investment across a 150-plus legal asset portfolio across its Funds 2/3, Funds 4/5 Series I, and one remaining balance sheet investment.
Omni Bridgeway received an initial $275 million from Ares in February, and overnight it was revealed that the remaining $45 million was received.
This gives Ares a 70 per cent interest in the Omni Bridgeway Fund 9 at a price representing a day-one cash multiple on invested capital exceeding 3x for Omni Bridgeway.
Proceeds will be used to "fully deleverage" the company's balance sheet in addition to delivering significant added working capital. For the end of December the group reported total non-current borrowings of more than $259 million, and had identified a $228 million pipeline of new investment opportunities.
In a volatile global capital market, Omni Bridgeway claims the deal highlights increasing interest from institutional investors given their "attractive, asymmetrical and uncorrelated return profile".
"We are proud to lead the field again with this innovative transaction, and we welcome Ares to our portfolio of blue-chip fund capital providers," says Omni Bridgeway chief executive officer Raymond van Hulst.
"It is the first continuation fund for legal assets and is highly significant in its scope and size as a secondary market transaction.
"It also showcases the value of Omni Bridgeway's institutional-grade asset management platform. It demonstrates that deep pools of institutional secondary capital are available to increase liquidity and mitigate duration risk for good quality and well managed portfolios of legal assets."
Van Hulst says fund investors and shareholders will benefit from the increased liquidity, allowing the group to reinvest in new investment-stage funds series that further diversify and grow its portfolio.
"We are pleased to support Omni Bridgeway with this substantial transaction which underscores Ares' ability to deliver bespoke capital solutions at scale," adds Ares Management partner Jan-Paul Kobarg.
"We look forward to working with Raymond and the Omni Bridgeway team as they build on their leadership in an asset class which we believe will be increasingly targeted by institutional investors due to its attractive, uncorrelated returns."
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