Focused on litigation financing, Litigation Capital Management Ltd, also known as LCM, operates in an industry that is characterised by volatile earnings and capital intensive operations. Investors of the largest competitor IMF Bentham (IMF.ASX) have experienced a roller coaster ride over the past three years with share price movements of over 60% per year. The key message in LCM’s prospectus is that the company has won 78% of all litigation cases since 1998, but is a strong track record enough to create shareholder value?
LCM’s principal activities are investigation, management and funding of litigation for companies and individuals with a focus on commercial litigation, insolvency matters and class actions. Founded in 1998, the company has managed 46 litigation projects with a historical success rate of 78% and over the past five years a return on invested capital of 2.3 times was achieved. The current order pipeline spans over 14 projects with a gross claim size of $379 million.
The company is trying to raise up to $15 million via conventional IPO in order to transition from an externally financed to an internally financed business. If litigation cases are internally financed, LCM can reap the full economic benefits if the settlement is successful rather than having to pass on the funds to the third party that provided funding. Management predicts a net profit after tax of $4.4million for fiscal year 2017 based on the current projects pipeline, average time to completion and historical success rate. However, poor litigation outcomes or major delays with project delivery will adversely impact financial performance which is the biggest risk for a company operating in this space.
The potential claims portfolio offers upside for shareholders but management is required to control costs and manage capital appropriately. A large settlement win and introduction of a dividend may help re-rate the share price, but IPO investors need to consider the volatile nature of this business.
ASX Code: LCA Shares on Offer: 21.4m Listing Price: $0.70 Market Capitalisation: $37.5m Listing Date: December 13
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.
Contact the Author
You can contact the author on the following:
Phone: 02 8031 9700
Interested in IPOs? Bid directly here:
Disclaimer: Clicking on this link will take you to a third-party website. We do not control or give advice regarding the content or links that appear on these sites and Wise-owl accepts no responsibility or liability in respect of any third party materials. Wise-owl may earn a commission from any product or service from third party websites.
Sydney-based independent software vendor (ISV) Simble Solutions (ASX:SIS) has struck a distribution agreement with Synnex Australia that sees the energy technology-focused firm tap into the distributor’s network of more than 6,000 partners around the country.
Sign Up for Free Trial
Your access details have been sent to your email. Please check your SPAM folder if you have not received it.
A copy of the financial service guide (FSG) can be found here: Click here
Terms and Conditions
This site is operated by Wise-owl Holdings Pty Ltd, an authorised representative of wise-owl.com Pty Ltd, holder of Australian Financial Services (AFS) License 246670. These Terms and Conditions are addressed to you and anyone that uses the contents provided within this site. The content of wise-owl.com contains general information and advice on various products that are available on a subscription basis via this site. You acknowledge and agree that wise-owl.com may at any time alter the contents or remove part or all of the pages with the intention of ceasing publication of some or all of the pages, either temporarily or permanently.
Access to wise-owl.com is granted by use of a valid User Identification and Password, which is available to authorised subscribers. When wise-owl.com issues a User Identification and Password to you, You must treat it as confidential, not disclose it to any third person and comply with the Terms and Conditions of use. You must not interfere with or disrupt other users of wise-owl.com, or manipulate any information or data.
In the absence of notice from you that the confidentiality of your User Identification and Password has been compromised, wise-owl.com will be entitled to construe all activity on wise-owl.com using that user identification and password as being for and on behalf of you and you agree to pay all fees so incurred and to take full responsibility for all actions of person using your User Identification and Password. wise-owl.com reserves the right to amend the User Identification, Password and other security procedures for access to wise-owl.com at any time. If you have any queries please email us at firstname.lastname@example.org or phone 1300 306 308.
All subscriptions are on an automatically recurring basis. To cancel your subscription call 1300 306 308 or send an e-mail to email@example.com. All cancellations must be submitted at least 5 business days prior to next due payment. No refunds will be given if these terms are not met.
The reports on this website are produced by Wise-owl Holdings Pty Ltd (Wise-owl), an authorised representative of wise-owl.com Pty Ltd, holder of Australian Financial Services (AFS) License 246670, with AFS Representative Number 001259718. Wise-owl.com has made every effort to ensure that the information and material contained in these report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgement. Except to the extent required by law, wise-owl.com does not accept any liability, including for negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. These reports are for information purposes only and are not intended as an offer or solicitation with respect to the sale or purchase of any securities.
WARNING: The reports are intended to provide general financial product advice only. They have been prepared without having regard to or taking into account any particular investor's objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.
The distribution of these reports in jurisdictions outside Australia may be restricted by law and persons who come into possession of these reports should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate securities laws. Members who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.
DISCLOSURE: Wise-owl.com and/or its associates may not effect a transaction upon its or their own account in the investments referred to in this report or any related investment until the expiry of 24 hours after the report has been published.
Additionally, wise-owl.com may have, within the previous twelve months, provided advice or financial services to the companies mentioned in these reports.
These reports may not be reproduced, distributed or published for any purpose, unless the person or entity seeking to do so is expressly authorised in writing by wise-owl.com.
The securities recommended by wise-owl.com carry no guarantee with respect to return of capital or the market value of those securities. There are general risks associated with any investment in securities. Investors should be aware that these risks might result in loss of income and capital invested. Neither wise-owl.com nor any of its associates guarantees the repayment of capital.
Personal identification information
We may collect personal identification information from Users in a variety of ways, including, but not limited to, when Users visit our site, register on the site, subscribe to the newsletter, fill out a form, and in connection with other activities, services, features or resources we make available on our Site. Users may be asked for, as appropriate, name, email address, phone number. Users may, however, visit our Site anonymously. We will collect personal identification information from Users only if they voluntarily submit such information to us. Users can always refuse to supply personally identification information, except that it may prevent them from engaging in certain Site related activities.
Non-personal identification information
We may collect non-personal identification information about Users whenever they interact with our Site. Non-personal identification information may include the browser name, the type of computer and technical information about Users means of connection to our Site, such as the operating system and the Internet service providers utilized and other similar information.
Web browser cookies
How we use collected information
Wise-Owl may collect and use Users personal information for the following purposes:
To improve customer service
Information you provide helps us respond to your customer service requests and support needs more efficiently.
To personalize user experience
We may use information in the aggregate to understand how our Users as a group use the services and resources provided on our Site.
To process payments
We may use the information Users provide about themselves when placing an order only to provide service to that order. We do not share this information with outside parties except to the extent necessary to provide the service.
To send periodic emails
We may use the email address to send User information and updates pertaining to their order. It may also be used to respond to their inquiries, questions, and/or other requests. If User decides to opt-in to our mailing list, they will receive emails that may include company news, updates, related product or service information, etc. If at any time the User would like to unsubscribe from receiving future emails, we include detailed unsubscribe instructions at the bottom of each email or User may contact us via our Site.
How we protect your information
We adopt appropriate data collection, storage and processing practices and security measures to protect against unauthorized access, alteration, disclosure or destruction of your personal information, username, password, transaction information and data stored on our Site.
Sensitive and private data exchange between the Site and its Users happens over a SSL secured communication channel and is encrypted and protected with digital signatures.
Sharing your personal information
We do not sell, trade, or rent Users personal identification information to others. We may share generic aggregated demographic information not linked to any personal identification information regarding visitors and users with our business partners, trusted affiliates and advertisers for the purposes outlined above.
Third party websites
Users may find advertising or other content on our Site that link to the sites and services of our partners, suppliers, advertisers, sponsors, licensors and other third parties. We do not control the content or links that appear on these sites and are not responsible for the practices employed by websites linked to or from our Site. In addition, these sites or services, including their content and links, may be constantly changing. These sites and services may have their own privacy policies and customer service policies. Browsing and interaction on any other website, including websites which have a link to our Site, is subject to that website's own terms and policies identification information regarding visitors and users with our business partners, trusted affiliates and advertisers for the purposes outlined above.
We use Google Analytics to collect information about how people use this website. The information we obtain from Google Analytics helps us understand user needs so that we can offer a better user-experience.
Your acceptance of these terms
By using this Site, you signify your acceptance of this policy and terms of service. If you do not agree to this policy, please do not use our Site. Your continued use of the Site following the posting of changes to this policy will be deemed your acceptance of those changes.