Burford Capital Limited (NYSE:BUR) Q2 2025 Earnings Call Transcript

Burford Capital Limited (NYSE:BUR) Q2 2025 Earnings Call Transcript August 8, 2025

Operator: Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Burford Capital’s Second Quarter 2025 Financial Results Conference Call or Audio Webcast. [Operator Instructions] I would now like to turn the conference over to Josh Wood, Head of Investor Relations at Burford. You may begin.

Josh Wood: Thank you, Bella, and good morning, everyone. We hope you’ve all been enjoying a nice summer, and we appreciate you joining us today to discuss Burford’s second quarter results. On the call, we have our Chief Executive Officer, Chris Bogart; our Chief Investment Officer, Jon Molot; and our Chief Financial Officer, Jordan Licht. Earlier this morning, we posted a detailed earnings presentation, which we’ll refer to during the call, and also filed our Form 10-Q, both of which you can find on our Investor Relations website. But before we get started, just a reminder that today’s call may contain forward-looking statements that involve certain risks, uncertainties and other factors that could cause actual results to differ materially from those discussed during the call.

For more information regarding these risk factors, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC. We’ll also be referring to certain non-GAAP financial measures during the call. Please refer to today’s earnings materials and our filings with the SEC for additional information, including reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. And with that, I will turn the call over to Chris.

Christopher Peter Bogart: Thanks very much, Josh, and thanks to everyone for joining us today. It was interesting just after the quarter closed, Bloomberg ran a piece entitled, Litigation Funder Burford’s Week of Big Wins. And the piece opened by saying, it’s been a good week for Burford Capital. And that was absolutely true for reasons that we’ll talk about with you. But in fact, it wasn’t just a good week. It’s been a really good quarter and a really good 6 months. And I’m on Slide 6 to take you through a few of the highlights. In terms of new business, we saw a really robust period for new business. The second quarter was significantly higher in terms of new definitive commitments than any quarterly period that we’ve had for the last couple of years.

And if you look at this on a year-to-date basis, we’re up very materially from the comparable 2024 period, up 71%. So that’s just showing, I think, the strong demand for our capital out there in the market and our continued ability to make substantial commitments against meaningful pieces of litigation and arbitration around the world and continues to show the benefit of the global footprint and the incredible team that we have. Looking at the income statement, basically, we were up across the board here on a quarter-to-quarter basis versus year-to-date basis. And we’ve done that throughout the piece. Net income, of course, was up very, very strongly, as you saw, 5x on a year-to-date basis compared to 2024, 63% up on the quarter. But it wasn’t just net income, it was across the piece.

So revenues were up. As Jordan will talk about, operating expenses have returned to a run rate stable basis. So we’re just very pleased with not only the level of new business that we were able to create, but the financial performance that the existing portfolio has continued to deliver. That financial performance means that when you look at the combination of new business that we’re putting into the portfolio and the performance of the existing assets in the portfolio, which have an impact on the base value of the portfolio. And again, this isn’t a fair value thing. We’re talking just about definitive commitments and cost. And you saw that, that number is up 15% year-to-date. That’s actually a higher rate of growth than we need to achieve to be able to meet the targets that we set out — the longer-term targets that we set out in the April Investor Day.

And then cash kept on coming in the door from cases, and that’s obviously always a good thing to see. So 4 key messages, 4 key financial metrics for us, all of which were strong during the course of the quarter and have been strong year-to-date. I want to also touch on a couple of other things. First, we were successful shortly after the close of the quarter in going out and raising a new $500 million issuance. We were able to do that with great market support. That deal came together very, very rapidly, in not much more than 24 hours. We were able not only to upsize it, but also to price it more tightly against the indices, both Treasuries and the BB index, than we’ve ever been successful in before. And we had also a lot of new debt investors come into the book.

So that was just a very successful offering, and I think it shows the market maturity that we have and the acceptance of the proposition that we have to offer in the market. That gives us a very desirable cost of capital, especially compared to our competitors. And candidly, there’s nobody else that we compete with in this market who has the ability to access capital like that on that kind of scale, time frame and pricing. And finally, no call would be complete without a reference to YPF. YPF had a fair bit of progress during the course of the quarter. We now have a tentative oral argument date in October for the oral argument of the main appeal. That’s been an item that we’ve been waiting for, for some time, and so it’s delightful to see that moving ahead.

We’ve also had not only general progress, both in the United States and in other jurisdictions in terms of moving forward with our enforcement activities, but we had a specific victory in New York in that Judge Preska in the Southern District of New York granted our motion for the turnover of some of Argentina’s YPF shares. That, of course, will be the subject of further legal proceedings. It’s on appeal, as one would expect, but it was nonetheless another very strong marker of forward progress in the case. I know that investors always want to hear a lot about YPF, and it’s obviously an important part of our story. But at the same time, I hope that you’ll continue to understand the constraints on us in terms of talking in detail about our strategy and our assessment of what has happened.

There’s a lot public about YPF happily. And so investors really are capable, I think, of reading themselves into the case at whatever level of detail that they want. This isn’t one of these cases where it’s very difficult to find out information about what’s actually going on. But when we talk about the case, the challenge, of course, is a litigation challenge. You might remember that a couple of quarters ago, I gave a longer version of an update about YPF. And investors found that helpful, but at the same time, so too did Argentina. And Argentina has now quoted or referred to that about 100 times in court proceedings around the world. And it’s just some noise that is probably not desirable. So I think we will continue to keep you abreast of major developments in the case.

But in terms of commentary on the case, we’re going to have to leave people to read themselves in on their own. And with that, let me turn you over to Jordan to walk through some numbers.

Jordan Licht: Thank you, Chris, and good morning to everybody. I’m starting off on Slide 9, which gives you the overall combination of our 2 segments, Principal Finance and Asset Management. First, just looking at the total revenues, you can see a large increase of year- to-date compared to last year, $280 million versus $168 million in the same period. Bring that all the way down to the bottom line, you can see that our net income has also risen $120-ish million compared to $24 million, and earnings per share at $0.53 is close to 5x for the same period last year. I’ll walk us through the Principal Finance segment next. Jon will help me, and then I’ll hit Asset Management and walk through our expenses as well as our capital and liquidity.

So let’s move to the Principal Finance segment. I’m skipping forward to Page 12. Start off in the top left, just the sheer size of the portfolio. When you look at fair value of $3.8 billion, undrawn commitments of another $1.7 billion, $1.8 billion, you can see how much that has grown since 2020. Let’s take that $3.8 billion, the fair value and break it down into a couple of components, which you see down below. YPF makes up approximately 43% of the assets. You then have the remainder of the rest of the portfolio, $1.6 billion of deployed cost and then another 33%, $550 million, that’s 33% of deployed cost that represents a fair value markup of the asset. Now when you look at that 33%, you can compare that to our historical ROIC, and there is a large amount of revenue if we were to hit that historical ROIC that has yet to come into the book.

But let’s flip over to the right-hand side and look at the pie charts. If you look at the pie charts on the right, you see our exposure by geography. We’re not just a U.S.- based company. Our clients are global, our cases are global. You have 51% in North America, that’s predominantly the U.S. But then you have another 25-ish, 26% in EMEA, another 20% that’s a truly global portfolio. And our assets are quite diverse. I look at the pie chart down below, and I see 20% pizza slices, 21% where you truly have a mixed portfolio, 20% antitrust, 20% intellectual property, 18% arbitration, and that truly shows the diversity of our team, of our footprint and of our asset types. I move forward to Page 13 to talk about how the asset moved forward — or the portfolio moved forward over the period.

Overall, if you look at our capital provision income, you see total realized and unrealized gains on par with last year. Total capital provision income, of course, is much larger, $246 million versus $140 million year-to-date, and a good mix between both YPF and the rest of the portfolio. When I look at the 2 bottom charts, they both say the same thing. Left-hand side is the second quarter, right-hand side is the year-to-date bridge. I’ll focus on the left-hand side and just walk through these items. The asset grew of course, by our deployments. This is the cash going out the door. You see a passage of time, which is the next green bar. That’s the duration impact, as our assets move closer towards ultimate conclusion. And you can see when you compare the left to the right, $61 million on the left, $120 million, which makes sense given 1 quarter versus 2 quarters.

Discount rates were favorable this period. And since our assets are a net present value, when interest rates come down, the asset goes up in value, interest rates. The discount rate that we use to discount our assets was approximately 20 basis points in this quarter and also around 20 basis points in the first quarter. And so you see the $25 million there of improvement. And then you have the impact of milestones and the other inputs. These are model inputs as well as the objective milestones that we see as our cases progress. And, of course, realizations and realizations should be negative. That’s when the asset completes and turns itself into cash. And so you can see the progression of $3.6 billion to $3.8 billion. Well, let’s talk a little bit more about how that asset continues to grow by moving to Page 14.

And it grows at first by us putting out new definitive commitments. A definitive commitment is one in which we’ve underwritten the case. And Chris alluded to how the second quarter was a great quarter with respect to the amount of business that we put on. If you just look at year-to-date 2025 versus 2024, you can see the huge growth, $518 million compared to the $300 million in the same period last year. And you can see the second quarter, $361 million is our largest quarter compared to the last 9. When you look at those new definitive commitments, you then say, look down at the pie chart on the bottom left, and you see that we now have over $1 billion of new definitive commitment. We talked to you at Investor Day about growing the portfolio, and that growth in the portfolio is around deployed cost and these cases that we’ve underwritten.

And just looking at the new definitive commitments, that’s grown from under $800 million at the end of the year to the $1.065 billion it is now. As you’ll recall, though, these commitments are not revolvers. The clients need to do the work in order to get invoiced in order for us to put the money out. And so, you’ll see that move episodically through each period. Overall, our deployments were in line with what they were last year. Let’s turn to 15 to talk about our realizations. Overall realizations were ahead of pace of last year at $225 million versus $219 million. You then look at the ROICs on the bottom, and you see that year-to-date, we’re at 37%. And I think it’s important to remind people of what we discussed in the first quarter. Our assets aren’t homogeneous.

Some are longer in duration, some are shorter, and they have different risk bands, which we depicted on the slide earlier. We had an asset in the first quarter that was originated in 2024 that concluded early in 2025. And when you saw that, you see a low ROIC, which makes sense when an asset has a short duration. But the IRR at 40% was quite healthy and above our average. And so naturally, you would expect to see the year-to-date 2025 ROIC be slightly lower than our historical. But that’s not the only asset that concluded. It’s important to note that in addition to that, we’ve had 6 additional assets generate $10 million or more million in year-to-date 2025. And with that, I’d like to turn it over to Jon to speak a little bit more about the portfolio.

Jonathan T. Molot: Thanks, Jordan, and thanks to you all for joining. As Jordan said, we have different ways that cases resolve and generate cash for us. And if you turn to Slide 16, you see that not just in a particular quarter, but over our lifetime. And we have now had realizations exceeding $3.5 billion over our lifetime. And you see it’s not that complicated a business, right? I mean there may be variation, as Jordan said, with shorter-term, lower-risk, high-dollar things that produce quick settlements and great IRRs, but lower ROICs. And then you have some things that go all the way to trial through appeals, and you can earn large multiples. And we see that breakdown on Slide 16. Of that $3.5 billion, roughly $2.5 billion is coming from settlements.

78% of our deployments result in settlements and about just under $1 billion has come from adjudication wins, which comes from just 15% of our deployments, but earning much higher returns. In contrast, our adjudication losses are only 7% of deployments. Like, when you think about this slide, it really shows you why Chris and Jordan are able to say we had a good quarter, and we’re able to say that again and again. I’m focused less on any particular quarter and more on how the business performs over the long haul. But to generate the 83% return on invested capital, 26% IRR with a weighted average life of 2.6 years, like, how do we do that? Well, the asset class lends itself to that because there’s 2 ways that things resolve. They either settle or they go to trial.

The second part of it is we’re good at what we do. You can see that we pick cases that win more often than they lose, much more often than they lose at trial, and that defendants recognize our strong cases as you move along, and therefore, they come to the table and settle. So this slide, I think, is capturing in numbers the quality of our team and the attractiveness of the asset class. And if you turn to Slide 17, which I’ve spoken to before, it hammers that home, but in a dispersion of all of our investment outcomes representation. So what I mentioned before, our losses are fewer; they’re also smaller. You look at the left side of the chart, the black bars, the wins are more plentiful, but you also see some of them are very large. Those red bars where we are earning greater than 200% return on invested capital.

That’s a triple or better with most people’s lingo. So the asymmetry of returns makes this a really attractive asset. And the way our team does it, we’re able to get the most out of it. I can’t think of another place to invest capital that produces these kinds of returns because of the nature of the asset class. if you do it right. And if you turn to Slide 17, you see that representation. This time, it is over time by vintage. And what’s interesting about this table is, again, you see the same IRR and ROIC in the upper right over the life, and you see that breakdown differently year-to-year. As Jordan said, there could be a year where you have a very large short-duration matter that the money goes out and comes back in relatively quickly, we earn a very attractive IRR, but a lower ROIC.

And other matters go the distance, take longer, and can produce truly outsized returns. Over time, and across the portfolio, these are where the numbers come down. And we’re very happy to have that diversity. And Jordan mentioned, we have diversity across geography, subject matter, counterparty, you name it. A lot of the diversity is in terms of risk and duration and size as well, and we’re very happy to have that. It makes for a robust portfolio that has performed very well over time, and that is poised to continue to deliver. So one thing that’s interesting about this is not just comparing the red bars to the black and gray. That’s the first. When you look at this, you say, well, how much did you put out? How much did you get back? Those red bars are quite attractive.

And you see, not surprisingly, the older vintages, the red is going to be higher relative to black and gray because more things have had time to work their way through the system and resolve, whereas for the more recent vintages, things haven’t resolved yet, so the red isn’t going to be as high. And so over time, we see the red bars go up. But I also don’t want you to think the black and gray are stagnant. Jordan mentioned before when we talked about how good this past quarter was as a matter of definitive commitments. We make commitments at the beginning, but it takes time for the lawyers working on the case to incur costs and to bill hours, and the money then goes from being a definitive commitment to an actual deployment. So the black and gray go up in the more recent vintages as well over time, and then the red will follow.

And it’s just, as I say, it’s not that complicated. I guess it’s complicated to underwrite any piece of litigation. But when you have a book like this with a team like we do, it just continues to perform, and I’m very pleased. So with that, I will turn it back over. Thanks so much.

Jordan Licht: Thanks, Jon. I’ll quickly switch over to the Asset Management segment. On Page 22, you can see some of the highlights depicted in pictures. The Asset Management income year-to-date of $21 million compares favorably to where we were at the same point last year. And in the first quarter. I’ll remind folks again that we recognized for the first time, proceeds from the Advantage Fund. This is obviously a good first step in seeing that fund and its performance and value to us. Overall, you look at the size of the Asset Management portfolio, it’s around $2 billion. You have $1 billion in the partnership with the sovereign wealth fund and then slightly under $1 billion with respect to our other private funds. You then look at our overall cash and our liquidity.

I’m on Page 24. And you sit here and say we’ve got $440 million of cash at the end of the quarter. That number obviously doesn’t include the recent debt issuance that Chris just mentioned. But it was overall, absent that, still a very strong period with respect to cash year-to-date. If you look at the bottom right-hand side, you can see that we’ve got $306 million of cash receipts year-to-date, which compares very favorably to the year-to-date of $245 million same point last year. Overall, we also still have $118 million of receivables on the balance sheet as of the end of the quarter. You look at our expenses on Page 25. And as Chris had mentioned, the quarter and year-to-date increases in expenses are predominantly attributable to variable noncash drivers in the comp and benefit line, and I’ll spend a little bit of time walking through that.

First and foremost, I’ve talked about this before, movements in the share price impact the share-based and deferred compensation line. When our employees elected to defer their compensation and select Burford stock, that liability moves with the share price, and we hedge that. Unfortunately, it doesn’t come through the income statement, but we buy those shares in the market to offset that. The other piece that you’ll see is long-term incentive comp is up. But, of course, it’s up. It should be. That is directly tied to our revenue as it represents our carry program. And we had a lot more revenue in this year-to-date period versus the same time last year. And then finally, you can see our G&A line that has come down to around $7.6 million, and that’s right in line with the same quarter last year as well as the average throughout all of 2024.

I’ll finish up with our capital. Chris talked about the success of the issuance around the 2033s. And you can see that we’ve pro forma’d the end of the quarter numbers on this page. First off, $123 million will be going out the door next week to pay off the 2025. But more importantly, you can see that we’ve extended the maturity schedule. We enjoy the laddered debt maturity schedule. It compares very favorably to the way in which our assets perform. That’s been pushed out to 5.2 years. The weighted average cost of debt has only moved around 10 basis points. We’re at 7.4% in terms of our weighted average. And overall, our metrics with respect to our covenants are well within covenant levels at 0.9x, which puts us in a great place to continue to maintain the balance sheet, to continue to invest in new assets, and we have plenty of capital to do that as we look to continue to grow.

And so, with that, I’d like to turn it over to Chris for some closing remarks and then Q&A.

Christopher Peter Bogart: Thanks very much, Jordan. And I’m on Slide 27. Just I’ll leave you with a couple of thoughts that we’ve already hit during the course of the presentation. The first is around new business. We wrote a lot of new business. We’re happy with what’s happening there. As we said during the last call that we had with you, one of the factors affecting new business is the extent to which we have big cases, which are usually multiparty cases. And sometimes we do and sometimes we don’t in the period. This period and the period before, we did. And so that’s a good thing. It’s not predictable. It’s episodic. But when it happens, it just adds, as Jon was describing, to the overall value of the going-forward portfolio because those are cash flows.

Those cases do often settle, and those are cash flows that will come back to us during the course of future years. So we’re thrilled with the new business that we’ve written. We’re thrilled with the overall growth in the portfolio base, again, as I said before, exceeding the level that we would need to be able to meet the longer- term commitments that we outlined for you before at Investor Day. We’re delighted as well that things are happening in the YPF case. Nobody ever says litigation goes faster than you want it to. And the YPF case is an example of things that have not gone as quickly as we would have liked. But once you have forward momentum, that’s a good thing, and you’ve seen obviously a whole lot of press coverage and media reaction to those developments.

And Jordan just talked about our ability to access the markets. That’s a really significant competitive moat for us. You don’t see anybody else doing this. We remain the only litigation finance firm in the world that is either publicly listed in the New York Stock Exchange or accessing the U.S. public debt markets. So with that, we’re pleased with where we stand, and we’d be delighted to take your questions.

Operator: [Operator Instructions] Your first question comes from Mark DeVries with Deutsche Bank.

Q&A Session

Mark Christian DeVries: Appreciate the incremental comments on YPF. I have a few follow-ups that I think you can respond to without providing more fodder for Argentina’s efforts to distract the courts. More on timing. Any sense for what the timing is for the Second Circuit to hear the appeal for Argentina on the order to turn over the YPF shares?

Christopher Peter Bogart: So there’s sort of a 2-part procedure going on there. So what happened is Judge Preska on June 30, issued her order requiring the turnover of the shares. And then Argentina went back to her and asked her to stay that order pending appeal. And she declined to do so. She issued a written order saying basically that Argentina had been dragging their feet. So Argentina then went to the Second Circuit Court of Appeals and again did 2 things: one is they appealed the underlying turnover order; and the second is they asked the Second Circuit for a stay of the order. And so the Second Circuit, first of all, is going to decide whether to stay the order. And that’s something that one would imagine they would decide fairly quickly.

The matter is calendared next week before a motions panel, but who knows when that motions panel, especially since we’re in August, will issue a decision. So that’s the stay portion of it. And the decision on the stay probably has an impact on the speed of the appeal itself of the turnover order being heard. So there’s not a briefing schedule in place yet for the appeal of the turnover order.

Mark Christian DeVries: Okay. That’s helpful. And then on the broader appeal of the case of the Second Circuit, can you just give us a sense for how long it might take the Second Circuit to give its judgment once it’s heard the case or the appeal?

Christopher Peter Bogart: Yes. Unfortunately, there’s really no answer to that. It depends very much on the workload of the individual members of the panel that hear the case. Just to back up from that, the Second Circuit is composed of 20-odd judges, but only 3 of them hear individual cases. So you’ll get a panel of 3 judges. And the timing of a decision will depend on the workload and speed of the member of the court who ultimately is assigned to write the decision. You would hope that this would be measured in months, but it’s very difficult beyond that to predict anything.

Mark Christian DeVries: Okay. Got it. And then just one last one. On the YPF-related unrealized gains in the quarter. Was that mainly driven by the Southern District’s ruling that they had to hand over the shares? Or was it related to some of the other progress you mentioned, Chris, in other jurisdictions?

Christopher Peter Bogart: Jordan, do you want to touch on that?

Jordan Licht: Yes, appreciate it. There’s a couple of components. Obviously, there’s what you just mentioned as well as duration, just given the fact that we moved forward a quarter and some interest rate change. So Mark, that’s not something that we’re going to detail how every single component there works, but those are the factors that moved it.

Operator: Your next question comes from Julian Roberts with Jefferies.

Julian Roberts: I’ve got a couple. It looks like, obviously, the YPF fair value gain resulting from progress in the case wasn’t the whole of the fair value gain in the quarter. Can you give us any sense of how many other cases contributed to the fair value gains because of progress on the individual matters and whether there was any one that contributed quite a lot? And then my second question, which really comes in 2 parts, relates to the schedule of new assets for the first half of 2025. And I was going to say the Asian ones, I don’t think you made any investments in Asia last year. Are those in any way linked to the litigation and the contract cases there, which I see are both single. And then I was going to say you’ve had success — initial success, it appears, in 2 other cases, one is a global mixed IP single case where you’ve had $5 million of realizations and there are still $24 million worth of deployments outstanding.

Is it fair to read some success into that, it being a single case? And to what extent can we be optimistic about the rest of that realizing in the not-too-distant future?

Christopher Peter Bogart: So Jordan, do you want to take the first half of that and, Jon, the second, perhaps?

Jordan Licht: Yes. So Julian, appreciate the fact that you studied the website table. The first piece in terms of individual cases moving in, and you know, we don’t speak a lot around any individual cases. But on Page 13, we do break out YPF versus the rest of the portfolio. I wouldn’t say that, in particular, is one case or not. As I mentioned also, when we look at the realizations, we did have 6 different realizations besides the one that I had mentioned in the first half of the year that were over $10 million. So I would say, broadly speaking, it’s an array across the book.

Christopher Peter Bogart: And Jon, do you want me to touch on IP or do you want to do that?

Jonathan T. Molot: I think you could feel free. I would guess I would just say that when I look both at the questions about where realizations or fair value gains are coming and at the question of deployment of capital, although it is true there are certain core things we get particularly excited about that move the needle, like we’ve grown enough, the portfolio is big enough, both in terms of what we’re putting out and what’s moving through the pipeline and the underwriting process at any given time, and even more so what’s in the portfolio that it probably wouldn’t make sense to focus too much on any one thing as a harbinger of how the book is going to perform over the next quarters. There’s no doubt that when you have a partial realization from a matter with a lot of money still outstanding, that’s a good sign. But I don’t think I’d say anything beyond that. Chris, I don’t know if you have color on it.

Christopher Peter Bogart: Yes. Well, Julian, thanks for the questions. We haven’t actually talked all that much about the way intellectual property cases work. And so maybe it’s worth just 30 seconds on that point because like lots of other kinds of litigation, they fall into different categories or different buckets. So sometimes we are, for example, financing a university that has developed some innovative technology and believes that there is an infringement going on of that technology, and the university doesn’t have a budget to go and pursue it. And so we might there have one patent against one potential [ litigator ]. But the other thing that might be happening is that you might actually have a category-wide dynamic. So again, early technology development that in a patent that people have overlooked and now the university or whoever the patent holder is, is saying, well, look, this wonderful new technology that lots of people are using, all of their uses infringe my patent.

And so there, you might have litigation, you might have licensing, you might have a combination of the 2. And those you can often have a campaign-style approach in a not dissimilar way that we have multiparty campaigns in the core commercial business. And so seeing one realization, as Jon said, suggests that somebody out there believes they’re vulnerable and therefore, have settled, but that might just be the beginning of that campaign’s potential over time.

Operator: [Operator Instructions] Your next question comes from Randy Binner with B. Riley Securities.

Randy Binner: I apologize if I missed this in the prepared run through the deck. But with just an Asset Management — the Asset Management income of $7.1 million in the quarter, it just was below our expectation in the model. And I just — I didn’t quite catch why that was lower than in other recent quarters. Can we review that, please?

Christopher Peter Bogart: Sure. Jordan, do you want to take that?

Jordan Licht: Sure. Well, overall, when you look at our Asset Management piece, you first, I think, have to look at some of our historical funds still need to hit hurdles for us to hit the — they’re European-based for us to receive the income. And those are funds — some of those funds are ones that we inherited as part of the Asset Management acquisition years ago. With respect to the funds that we originated, those assets tend to be commingled with the balance sheet, and they’ll tend to move generally in tandem with our recent vintages. Randy, I apologize, I can’t speak directly to what you modeled. The funds in and of themselves are not — obviously, were not growing at the same pace as they have historically been. Our focus has been on continuing to build the balance sheet as we move forward.

Randy Binner: Okay. That’s helpful. That’s helpful for the model. I guess a higher-level question, if I may. There was a lot of back and forth around the tax and budget bill in Washington last month. And I think it was a great outcome for Burford, but there were some op-eds that continue to talk about litigation finance as it relates to the insurance industry. And I’m just wondering if you can share like what you think the next iteration of that debate is and if there’s a way to maybe find common ground with the other side there. Just be curious your review of how July went and how that debate may continue.

Christopher Peter Bogart: Well, I think that there’s nothing new here is the reality. When you think about what litigation finance does, it fundamentally deprives — where usually defendants or usually repeat users of the justice system. It deprives them of some structural advantages that they used to enjoy. And Jon has written extensively on this subject and I know a number of you have read his academic work on it, which is really seminal to the creation of the industry. And so it’s not surprising that people in that position are unhappy about the loss of that structural advantage and are unhappy about the leveling of the playing field that capital on both sides of cases creates. And so we have had opposition to what we do since the very beginning of Burford’s existence from deep pocketed corporate repeat defendants and from the insurance industry.

I don’t think that, that will ever change. We have been successful throughout our life in managing that opposition because at the end of the day, the argument that they need to make is a very unappealing argument. It’s basically an argument that says we want an unfair advantage, and we want to make it more difficult for people to have their disputes adjudicated fairly and promptly. And that’s why if you go literally around the world and listen to what governments and courts say, they say that the presence of litigation finance is a critically important element to the operation of their justice systems. Now if you go and read, for example, the review of litigation finance done fairly recently by the English government, they say exactly that.

They basically say without the presence of litigation finance capital, they wouldn’t be able to operate a fair and equitable justice system for all comers. And so I think you’ll always have the noise in the system. And I think we have shown that we’re pretty effective at dealing with that continued noise because at the end of the day, people who do make decisions about this stuff realize the importance of having this kind of quality of arms for justice systems that are important to the rule of law.

Operator: Your next question comes from Alexander Bowers with Berenberg.

Alexander Bowers: I had 2 questions, if I may. The first was just on the pipeline. Are there any particular industries or geographies, particularly outside the U.S., where you see big growth opportunities at the moment to commit to new cases? That’s my first question. Second question is just on something you raised at the Investor Day, which was opportunities — broader opportunities in the ecosystem of law. So things like law firm equity stakes, legal tech, alternative delivery of legal services, et cetera. Can you give us any update in terms of things you’re looking to pursue in that area?

Christopher Peter Bogart: Sure. So in terms of the pipeline, the answer continues to be that we have a broad and well-diversified pipeline. And the reason fundamentally for that is that we work so actively with so many of the world’s large global law firms and their businesses themselves are widely diversified. So when you go to — pick your favorite big law firm. You go to that law firm, it’s not like that law firm specializes in, let’s say, energy or hotels. They do it all. They represent every industry. And so, as a result, the flow of business that we get in is industry-wide as well. Now obviously there are industries that are more engaged in litigation than others. I said hotels a minute ago. We don’t do a lot of hotel litigation because hotels don’t sue a lot of people.

So there’s certainly more litigation in the technology industry than there is in the hotel industry, just as one random example. But that’s not a complete answer because you do certainly have industries that have one-off kinds of litigation. Who would have thought that the U.S. protein producers’ industry was, as the U.S. government found, engaged in rampant price fixing. And so you wouldn’t normally say, oh, well, food, that’s going to be a big litigation area, but it just so happens that because of that conduct, there is meaningful litigation going on in that industry today. In terms of geographies, we are continuing to expand what we do and where we do it. We’ve been a global business, and Jordan pointed the pie charts out to you before.

We’ve been a global business for years, and we happily look at things all over the world. But in some cases we have been doing that without boots on the ground. And what we’re doing over time is continuing to expand the places where we have boots on the ground. For example, just in the last few months, we have added people on the ground, both in Korea and in Spain. We’ve done business in both of those markets for years, but having somebody physically present means in our view that we’re likely to continue to expand the amount of business that we do in markets like that. And then in terms of the sort of noncore stuff, law firm, equity, legal tech and so on, yes, we are actively engaged in a regular review of potential opportunities there, and we certainly expect to continue to make progress there.

We’ve deployed small amounts of capital already in opportunities in those sectors, and we expect that to continue and grow over time. Thanks, Alex. And now we’ve got a webcast question from Trevor Griffiths, who says, Page 16 of the presentation shows radically better economics on adjudication results for only a 6-month increase in average life. Why are your clients prepared to give up such attractive economics for such a brief acceleration in timing of outcome? Jon, did you want to comment on that?

Jonathan T. Molot: Sure, I’m happy to. So for people’s reference, you can see that adjudication wins has an average life of 2.9 years versus settlements 2.4 years. And I think that’s what Trevor is referring to. It’s a good question. The big difference between that $1 billion that we’ve gotten in adjudication gains with close to 250% ROIC versus the $2.5 billion we’ve gotten from settlements was very attractive, but lower IRRs and ROICs, is risk as much as duration. If a case settles on the eve of trial, and we do not take the risk, that binary risk of losing the suit, it makes sense, a, that the settlement is going to be lower than the trial outcome if you win, right? You’re taking a discount in exchange, not just for the accelerated payment, but also the elimination of risk.

And also, b, that sometimes our terms will be structured to take less proportionately than if it goes to trial. If the plaintiff chooses to go to trial and risk our capital on the outcome, there’s going to be additional risk premiums sometimes charged for that decision to go to trial, whereas if they settle and eliminate the binary risk for us, then it may be cheaper for them. So there’s a discount that the plaintiff is accepting from the defendant, but then there could be a further difference in the charge for our capital depending on whether we take trial risk. But it’s a good question.

Christopher Peter Bogart: Yes. Thanks, Trevor, for that. Another webcast question from [ Fraser Lang ]. With the rise of AI and the utilization of personal and corporate data, how is Burford placed to evaluate and finance these types of cases? Well, I think the answer is really the same way that we’re placed to do anything that is touching new and evolving activity. We have a strong base of doing technology-related litigation. We’ve done that forever and ever. That’s certainly helped by the fact that some number of us have come from firms with technology backgrounds. As many of you know, I ran a technology media venture capital firm before starting Burford. And so these are certainly things that we pursue and are interested in.

Just like everything that we do, though, our focus is on large, complex, generally commercial-style litigation and not so much on individual use cases. So if you have the misfortune of having some sort of individual data breach, we’re not likely to be involved in those kinds of cases. But in terms of the overall area, there’s no question that AI presents a number of interesting legal issues. And those legal issues are — some of them are already being chewed on by the courts. The most interesting one right now is probably the copyright issues around the use of copyrighted material in training of large language models. And I think that as with most technological innovations, AI will be not only life-changing for businesses and for all of us but also give rise to some amount of dispute and litigation.

And we’re happy to be active participants in that. And I’m just waiting to see if we have anything else. And I think we might have exhausted people in this August period. So thank you all very much for joining us. We appreciate it very much. We appreciate your support and interest in the business. And as usual, we’re always happy to talk to you individually about any questions that you may have about performance, and we look forward to talking to you again in a few months.

Operator: This concludes today’s conference call. You may now disconnect.