Legal Financing Fund

Transcription

1 Legal Financing Fund Capital Protected Fund Provides secure finance to UK law firms who undertake cases on a no-win, no-fee basis. Low risk target yields: 11% per annum (GBP) 10% per annum (USD) 10% per annum (EUR) 5th July 2011 Axiom Legal Financing Fund 1

2 Objective To provide a capital protected fund with consistent returns that are notcorrelatedto to anyothermarket market. To increase the ease of access to justice by financing no win, no fee cases The Strategic Adviser makes no fixed charge to the fund and is motivated by performance The Fund will finance any litigation with these criteria: Loans can be underwritten Cases expected to complete in under 1 year Cases are easy to understand 5th July 2011 Axiom Legal Financing Fund 2

3 Examples of loans Unenforceable credit agreements where the solicitor takes action against the lender and repays the loan when the case settles. where the solicitor defends the client from action by the lender and takes a fixed term loan. Professional negligence variable term loans against solicitors acting for council house tenants exercising their Right to Buy their council property. against solicitors who obtained poor settlements when they acted for coal miners in industrial injury and sickness claims. Personal injury in road traffic accidents variable term Specialising in clear, but technically difficult cases. 5th July 2011 Axiom Legal Financing Fund 3

4 Commercial Cases Take longer, the target average settlement is 30 months Have higher h yields ildas there is more money lent at 18% Reduces the average turnaround time for each loan in the fund, increasing yields. The average will move toward 18 months from 12 months. Still carry insurance. High demand for funding 5th July 2011 Axiom Legal Financing Fund 4

5 Why Would A Law Firm Use The Fund? Law firms have high demand for compensation cases. Takes 9 12 months to complete a case Assume take on 5 cases per week and 40 weeks to complete a case. Average loan of 2,300 per case Cash flow impact is over 400,000 Credit crunch is restricting bank lending 5th July 2011 Axiom Legal Financing Fund 5

6 How Is Capital Protection Achieved? Every loan made to a law firm has 2 insurance policies that repay the loan capital in the event that: The case loses The law firm goes bankrupt 5th July 2011 Axiom Legal Financing Fund 6

7 How Is Capital Growth Achieved? Fixed fee of 15% charged on every case dependent loan. A lower rate is charged on 6 month fixed term loans. If case goes over 12 months, interest is then charged at 1.5% per month from month 13 Loan capital is reclaimed from the losing party for each case usually a bank, loan company or insurance company. Increased profit opportunity by turning cases around more than once a year 5th July 2011 Axiom Legal Financing Fund 7

8 Sensitivity Of Returns Annualised returns after insurance premium cost, fund admin fee and performance fee depend on the time to complete each case. The expected net returns are: Average no. of months to complete a case Annualised dfund returns 20.0% 0% 14.1% 1% 11.2% 12.0% 12.6% Returns above are for GBP investments. The returns in USD and EUR will be reduced by the cost of hedging. g 5th July 2011 Axiom Legal Financing Fund 8

9 How The Investment Works 1 Investor 1 Deutsche Bank Fund Administrator 1. Investor sends his money to Ai Axiom Fund account in Deutsche Bank in Cayman Islands. The Fund bank account is managed by JP Fund Administration Ltd, the Cayman Islands regulated Fund Administrator 5th July 2011 Axiom Legal Financing Fund 9

10 How The Investment Works 2 Investor 1 Deutsche Bank Fund Administrator 1. Investor sends his money 2. Law firm sends loan application to The Synergy Solution Ltd, the Strategic Adviser Strategic Adviser checks case details using a sophisticated computer program developed by a QC. Law Firm 2 Strategic Adviser 5th July 2011 Axiom Legal Financing Fund 10

11 How The Investment Works 3 1. Investor sends his money Investor 2. Law firm sends loan application 1 Deutsche Bank 3. Case is sent to Insurance Company for underwriting by the Fund Strategic t Adviser. Administrator Insurance Company The insurance companies scrutinise case details and approve underwriting of loan. They will repay the loan if the case loses. There is no recourse to the law firm for the loan. Law Firm 2 3 Strategic Adviser 5th July 2011 Axiom Legal Financing Fund 11

12 How The Investment Works 4 1. Investor sends his money Investor 2. Law firm sends loan application 1 Deutsche Bank Fund Administrator 3. Case is sent to Insurance Company 4. Insurance company approves case loan A 2 nd insurance policy is taken out to cover the event of a law firm going bankrupt. Insurance Company Law Firm 2 Strategic Adviser 3 4 5th July 2011 Axiom Legal Financing Fund 12

13 How The Investment Works 5 1. Investor sends his money Investor 2. Law firm sends loan application 1 Deutsche Bank 3. Case is sent to Insurance Company 4. Insurance company approves case loan Fund 5. Loan request sent to Fund Administrator Administrator to initiate payment Insurance Company 5 The Synergy Solution Ltd Ld(Strategic Adviser) send details of the loan and law firm to JP Fund Administration Ltd (Fund Administrator) in Cayman Islands Law Firm Strategic Adviser 5th July 2011 Axiom Legal Financing Fund 13

14 How The Investment Works Investor sends his money Investor 2. Law firm sends loan application Deutsche Bank 6 Fund Administrator 5 3. Case is sent to Insurance Company 4. Insurance company approves case loan 5. Loan request sent 6. Fund Administrator instructs bank to send the payment to Synergy (IOM)Ltd, the Loan Manager Insurance Company Law Firm Strategic Adviser 5th July 2011 Axiom Legal Financing Fund 14

15 How The Investment Works 7 1 Investor Deutsche Bank 7 6 Loan Manager Fund Administrator 5 1. Investor sends his money 2. Law firm sends loan application 3. Case is sent to Insurance Company 4. Insurance company approves case loan 5. Loan request sent 6. Fund Administrator instructs bank 7. Deutsche Bank send money to finance the loan to Synergy gy( (IOM) Ltd, the Loan Manager Law Firm 2 Insurance Company 3 4 Strategic Adviser 5th July 2011 Axiom Legal Financing Fund 15

16 How The Investment Works 8 1 Investor Deutsche Bank 7 6 Fund Administrator 1. Investor sends his money 2. Law firm sends loan application 3. Case is sent to Insurance Company 4. Insurance company approves case loan 5. Loan request sent 6. Fund Administrator instructs bank 7. Deutsche Bank send money 8. Loan details sent to Loan Manager by the Strategic Adviser Loan Manager Law Firm 8 2 Insurance Company 3 4 Strategic Adviser 5 Synergy (IOM) Ltd are administered by Turnstone (Europe) Limited, a regulated trust company in the Isle of Man. This is an added level of security to prevent the Strategic Adviser having access to the Investor s money. 5th July 2011 Axiom Legal Financing Fund 16

17 How The Investment Works 9 Investor 1 Deutsche Bank 7 Loan Manager Law Firm 2 Fund Administrator Insurance Company Strategic Adviser Investor sends his money 2. Law firm sends loan application 3. Case is sent to Insurance Company 4. Insurance company approves case loan 5. Loan request sent 6. Fund Administrator instructs bank 7. Deutsche Bank send money 8. Loan details sent to Loan Manager by the Strategic Adviser 9. Disbursements made for loan to law firm. These include: Court issue fee & allocation fee Court hearing fees (where applicable) Underwriter s audit report fee 100 to cover the law firm s work in progress. Enquiry agent fee Strategic Adviser fee Fund sales distribution fee 5th July 2011 Axiom Legal Financing Fund 17

18 How The Investment Works 10 1 Investor Deutsche Bank 7 6 Loan Manager Law Firm 2 Fund Administrator Insurance Company 3 4 Strategic Adviser 5 1. Investor sends his money 2. Law firm sends loan application 3. Case is sent to Insurance Company 4. Insurance company approves case loan 5. Loan request sent 6. Fund Administrator instructs bank 7. Deutsche Bank send money 8. Loan details sent to Loan Manager by the Strategic Adviser 9. Disbursements made for loan 10. Law firm repays loan with fixed interest charge of 15%. This takes 9 12 months. If the case loses, then the law firm still pay the interest, but the loan capital is repaid by the insurance company. Money is returned to Loan Manager 5th July 2011 Axiom Legal Financing Fund 18

19 How The Investment Works 11 1 Investor Deutsche Bank Loan Manager Fund Administrator Insurance Company 5 1. Investor sends his money 2. Law firm sends loan application 3. Case is sent to Insurance Company 4. Insurance company approves case loan 5. Loan request sent 6. Fund Administrator instructs bank 7. Deutsche Bank send money 8. Loan details sent to Loan Manager by the Strategic Adviser 9. Disbursements made for loan 10. Law firm repays loan and interest 11. Money is returned to Fund Administrator by the Loan Manager Law Firm Strategic Adviser 5th July 2011 Axiom Legal Financing Fund 19

20 How The Investment Works 12 Investor 1 12 Deutsche Bank 7 11 Loan Manager 6 Fund Administrator Insurance Company Law Firm Strategic Adviser 5 1. Investor sends his money 2. Law firm sends loan application 3. Case is sent to Insurance Company 4. Insurance company approves case loan 5. Loan request sent 6. Fund Administrator instructs bank 7. Deutsche Bank send money 8. Loan details sent to Loan Manager by the Strategic Adviser 9. Disbursements made for loan 10. Law firm repays loan and interest 11. Money is returned to Fund Administrator 12. Investor s profits are reinvested, but he can withdraw money without penalty. 5th July 2011 Axiom Legal Financing Fund 20

21 Risk Assessment 1 Liquidity Risk The fund dis not fully liquid, id loans will not be recalled to meet redemptions. Constant liquidity is provided by means of the flow of returned loans each month. Risk of fund management fraud StrategicAdvisers have no access to Investors money. Money managementis by regulated 3 rd parties Risk of fraudulent cases being presented All introducers of cases have to be regulated entities and cases are independently checked Risk of Law Firm failure Law Firms are covered by Professional Indemnity insurance, and the fund insurance cover bankruptcy. The Fund owns the case and so it can be passed to another Law Firm Risk of case losing It is expected that over 90% of cases will succeed because of the screening process undertaken by the Fund. Losing cases have the loans repaid by insurance Risk of Insurance Company failure If a ATE insurance company fails, the Financial Services Compensation Scheme" pays out 90% of the claim 5th July 2011 Axiom Legal Financing Fund 21

22 Risk Assessment 2 Risk of Counterparty failure The controllers of the investment money and signatories to bank accounts are JP Fund Administration ato Ltd a company holding a mutual ua fund administrators a s licence granted by the Cayman Islands Monetary Authority. The directors have many years experience in the accounting and administration business and can take advantage of newly developed software built with the flexibility and technological reporting capability that fund manager s demand today Synergy (IOM) Ltd a companyformedintheisleofmanandadministeredbyturnstoneeuropeltd. Turnstone was formed in 2005 and is licensed and regulated by the Isle of Man Financial Supervision Commission ( IOM FSC ) as a Corporate and Trust Service Provider, and provides a range of bespoke corporate and trustee services. Turnstone is part of the Turnstone Group, a global fiduciary service provider with an international presence, offering comprehensive private wealth, corporate and fund services to institutional and private clients. The director of Synergy (IOM) Ltd is Peacock Management Limited ( Peacock ), which is owned by Turnstone, and the directors of Peacock have been vetted and approved by the IOM FSC as fit and proper persons As regulated entities that are managed independently from the Strategic Adviser, they are expected to provide a robust administrative & financial structure to the Fund. 5th July 2011 Axiom Legal Financing Fund 22

23 The Strategic Advisor Board The fund does not need an Investment Manager in the normal sense, as the fund activity is that of finding suitable law firms and of sourcing cases for them to handle. The directors of the Strategic Adviser are Tim Schools Lawyer since1998 Previously 10 years in the police force Started own law firm in 2000 specialising in personal injury claims. One of the first to use the new no win no fee regulations. Also opened a claims management company employing over 400 staff dealing with in excess of 3000 cases per month. Sold his law firm in 2004 to develop further opportunities in the financial missellingsector sector and other related fields. David Kennedy 24 years experience in financial services, including being an IFA Worked as consultant to fund managers and international i llife companies Instrumental in attracting funding of 100 million for a class action in the UK from a major European Bank in th July 2011 Axiom Legal Financing Fund 23

24 Legal Financing Fund CapitalProtection: 100% of loans covered by insurance policies Minimum Investment: 25,000, $40,000, 30,000 (3 share classes) Dealing: 1 st September 2009, then monthly Entry fee: Management Charge: Performance Fee: Administration Fee: Redemption Notice: Withdrawal penalty: None None. Strategic Adviser s fees and marketing costs are taken from the loans & repaid by court award against the loser, or by the insurance. 25% of all gains above a hurdle rdleraterate of 10% per annum (on a high watermark basis), payable monthly. 0.15% per annum 30 business days. None. 5th July 2011 Axiom Legal Financing Fund 24

25 Summary Capital Protected Fund Low risk target yields: 11% per annum (GBP) 10% per annum (USD) 10% per annum (EUR) Uncorrelated to any other assets or markets Predictable, consistent returns GBP fund with returns hd hedged dto USD & EUR No management fee is charged to fund. No penalty fee for withdrawal. Fund emphasis on short consumer case loans provides liquidity. 5th July 2011 Axiom Legal Financing Fund 25

26 Important Information Axiom Legal Financing Fund, Segregated Portfolio ( the Fund ) is a Segregated Portfolio of JP SPC 1, a segregated portfolio company, incorporated in the Cayman Islands with limited liability. This document does not constitute a prospectus, offer, invitation or solicitation for the sale of shares in the Fund, nor should it be construed to constitute any investment advice. It is not intended to provide the sole basis for any evaluation of the Fund or any other instrument, which may be discussed in it. Subscriptions for any class of shares in the Fund can only be made by completing the subscription agreement for the relevant shares and after having been provided the offering documents as described in the Subscription Agreement. This document has been issued by the Strategic Adviser and the Promoter for information purposes only and although information in this document has been obtained from sources believed to be reliable, no guarantee, representation or warranty is being made by the Strategic Adviser or the Promoter as to the accuracy or completeness of the information contained in this document and such information may be incomplete or condensed. There is no guarantee of trading performance and past or projected performance is not necessarily a guide to future performance. Trading Risk The returns are dependent on the Strategic Adviser s success in managing the legal financing strategy, backed up by the insurances on the loans granted. The underlying investment is only for the experienced and sophisticated investor who can understand the risk inherent in this type of investment. Credit Risk Should any loan fail to be returned, the Administrator is dependent upon the credit risk of the underlying insurance policies for the return of the protected portion of his capital. The Investor is reliant on the Administrator and Loan Manager to fulfil their obligations in respect of the Fund. The investor should consider the credit quality and technical competence of the above parties before deciding to invest. Liquidity Risk The underlying assets of the Fund are not liquid, redemptions may be subject to delay if it is necessary to wait until the loans are returned to meet the redemptions. General Risks Investors may be exposed to foreign exchange risk, to the extent that they invest in products denominated in a currency other than their home currency. Investors should read the Fund Offering Memorandum, the Supplemental Offering Memorandum and the Subscription Agreement. Please refer to the Risk Factors section of the Supplemental Offering Memorandum. All estimates and opinions included in this document constitute our judgement as of the date of the document and may be subject to change without notice. This document is confidential and is being submitted to selected recipients only. It may not be reproduced or disclosed (in whole or in part) to any other person without our prior written permission. The Funds are not authorised or regulated under the provisions of the Financial Services and Market Act Accordingly, the Funds cannot be promoted or sold in the United Kingdom, other than under the exemptions permitted by the Act, in particular, the Financial Services and Market Act 2000 (Participation of Collective Investment Schemes) (Exemptions) Order Lawor regulation in certain countries may restrict the manner of distribution of this document andpersons who come into possession of this document are required to inform themselves of and observe such restrictions. Legislation or regulations in your home jurisdiction may prohibit you from entering into this fund. Our Administrators reserve the right to make final determination on whether you are eligible for any products or services. Residents or Nationals of certain jurisdictions may be subject to exchange controls and should seek independent advice before investing in this fund. This document is not a personal recommendation and you should consider whether you can rely upon any opinion or statement contained in this document without seeking further advice tailored for your own circumstances. Neither Ganoz Asset Management Limited nor Novus International Investments Ltd is able to provide any advice on the suitability of this investment or the impact on your tax position. Investors are advised to seek investment advice and personal tax advice from a suitably qualified financial professional adviser, lawyer accountant or bank manager. * Please note that the use of the word protected throughout this presentation, refers only to the fact that 100% of the amount loaned to each law firm is covered by insurance for non return. The returns are not guaranteed. 5th July 2011 Axiom Legal Financing Fund 26