Litigation funder Gerchen Capital Partners has successfully raised $600 million with the closing of its sixth fund, marking a significant strategic shift away from the traditional secondary transactions to a more diverse investment approach. This new initiative is designed to assist large corporations in monetizing their litigation and also aims to finance late-stage and post-settlement cases through a credit-oriented strategy. This approach suggests a deviation from their prior focus, as noted when GCP made its name dealing with secondary transactions involving the buying and selling of litigation investments. For more details, you can read the full article from Bloomberg Law.
The company’s CEO, Adam Gerchen, outlined this strategic pivot in light of unmet market needs, indicating that corporate monetization, where corporations receive funds based on their legal claim valuations, is now a focal point. This presents an opportunity where companies can obtain immediate cash flow without incurring debt, highlighting a departure from the traditional litigation funding model typically used to cover ongoing case legal fees.
In line with this strategy, Gerchen Capital hired Kelly Daley from Burford Capital, who specializes in corporate monetization transactions. Daley emphasizes the challenges corporations face in accessing liquidity against litigation receivables, unlike tangible assets like real estate or accounts receivables, which banks usually finance. She advocates for the certainty that Gerchen Capital’s strategy offers in the current unpredictable market environment, as businesses pivot toward more balanced and adaptive finance solutions.
Earlier successes in the secondary market were significant for Gerchen Capital, having closed secondary transactions worth $370 million in insurance protection to shield its portfolio against delays in litigation payouts. However, the new focus promises to leverage GCP’s extensive experience within the sector, including the valuable insights brought by new hires from established players like Burford Capital.
Gerchen Capital has reported a rapid escalation in asset growth, raising $1.9 billion since its inception three years ago, indicative of the potential market appetite for this adapted model of litigation finance. The strategic shift and new hires also reflect the firm’s continued commitment to innovation within the sector, balancing a deep toolbox of solutions with the entrepreneurial adaptability needed to meet evolving market demands.