Burford Capital Ltd. Q1 FY2025 earnings call

• Robust new business: Tripled definitive commitments, doubled deployments, and launched a new U.S. claim family.
• Strong realization and cash generation: Realizations at $163 million, significant cash brought in over the last four quarters, and meaningful liquidity position.
• Revenue growth: Capital provision income 5x higher year over year, and increased contribution from asset management income.
• Portfolio diversification: Diversified across geography, asset type, duration, risk profile, and size; example of a $100 million investment generating $125 million.
• Liquidity: $548 million cash at end of the quarter, with $103 million due from settlement.
• Expenses: Higher first quarter due to carry, G&A, and case-related expenditures, but some items not recurring in subsequent quarters.

The segment performance includes the principal finance segment (investing on behalf of the balance sheet) and the asset management segment (investing on behalf of third parties). Revenue from capital provision income saw a 5x increase compared to the first quarter last year. Asset management income also contributed more. Realizations were $163 million, with significant cash generation over the last four quarters. The portfolio is diversified by geography, asset type, duration, risk profile, and size, with examples like a $100 million investment generating $125 million.

Focus on longer-term business performance rather than just quarterly numbers. Expect to continue growth and momentum from the new business seen in the quarter.

• ISS recommending against re-election of two directors and disagreement on discretionary compensation.
• Uncertainties related to litigation outcomes, particularly YPF-related litigation with pending appeals and recognition/enforcement actions.
• Market turbulence and economic dynamics could impact business, but historically Burford benefits from market stress.

Q: Follow-up on YPF and IMF agreement.

A: The general IMF policy is that they don't do a program if there are outstanding debts due that are noted in the agreement and they're not engaged in reasonable dialogue in order to address and solve. This is generally for the IMF, it's not a condition of disbursement that you have already resolved the debts, but you have to be working in good faith to resolve them as a condition.

Q: Qualitative insight on new commitments.

A: That's certainly part of it, and it's related to the launch of a new U.S. claim family, with a cross-globalized portfolio style approach.

Q: Uptick in YPF-related unrealized gains.

A: Growth in interest in the Eaton Park corpus, increased value as interest grew, with us paying roughly around carrying value for the increase.

Q: New claim family type.

A: When talking about claim families, it's like multi-party litigation such as the food proteins price fixing claims where the U.S. government found a price fixing conspiracy among proteins producers, and we can add on marginal buyers.

Q: Commitments vs deployments.

A: Commitments can offset deployments in the short term, but long-term growth is expected, and in cases like YPF coming in, the portfolio might shrink temporarily but is part of the long-term plan.