The litigation funding sector is experiencing unprecedented trading conditions due to a spike in UK insolvencies.
- Manolete has declared it is benefiting from the most favourable market conditions since its inception in 2009.
- Higher interest rates and geopolitical tensions are driving insolvency numbers to record levels.
- Despite strong performance, Manolete’s share price has suffered, possibly due to a decision against issuing dividends.
- Chairman Lord Leigh remains optimistic about the company’s future amid high corporate insolvency rates.
The litigation funding industry is currently navigating one of the most favourable periods in recent history, fueled by a surge in UK insolvencies. Notably, Manolete Partners, a leader in the sector, cites a transformed market landscape since the challenging times of the Covid-19 pandemic. According to Steven Cooklin, the CEO of Manolete, the current environment presents unparalleled trading opportunities, owed significantly to escalating interest rates and geopolitical tensions, particularly in Eastern Europe and the Middle East.
Statistics from the Insolvency Service indicate that the year 2023 witnessed the highest number of creditor voluntary liquidations in the UK since records began in 1960. This has presented unprecedented opportunities for Manolete, albeit initially involving mainly smaller ‘zombie’ companies post-Covid support withdrawal. More recently, however, larger company insolvencies are returning to pre-pandemic levels, offering even greater potential for litigation funders.
Manolete reported an 18% increase in new case investments to 311 by the end of March 2024, while completing a record 251 cases—30% more than the previous year. The firm achieved a remarkable internal rate of return of 131% on its operations, albeit total realised revenues showed a 10% decrease due to an exceptionally large case in the prior year balancing the figures.
Despite these impressive operational outcomes, the decision not to distribute dividends has seemingly led to a nearly 10% dip in Manolete’s share price. However, Chairman Lord Leigh underscores the strategic priority of maintaining cash reserves for future investments, accentuating the company’s optimism about capitalising fully on the current market dynamics. The company continues to expand its network among insolvency practitioners, which remains a pivotal aspect of its growth strategy.
The first five months of the current fiscal year have shown buoyant trends, with new case enquiries up by 22% compared to the previous year. The in-house legal team has successfully settled 116 cases worth £11.8 million, markedly outperforming the previous year’s figures within the same timeframe, showcasing the high demand for Manolete’s services.
Manolete stands at the forefront of a burgeoning market, well-positioned to leverage the current high levels of corporate insolvency for future growth.
