AxiaFunder has completed the first tranche of a secondary market trade of litigation assets, in what is believed to be a first for the alternative lending market.
£37,000 of par value bonds were traded at a 20 per cent premium to the original issuance price to 12 different buyers, marking the first time that litigation assets have been packaged in this way.
“This is clearly a small trade but we believe it is one of the first, if not the first, secondary public market trades of commercial litigation assets to date in Europe or the US,” said Cormac Leech, chief executive of AxiaFunder.
“The bonds will accrue 162 per cent interest from 6 December 2020 provided the case wins.”
A second tranche of assets worth an estimated £23,000 is expected to complete next week.
AxiaFunder is working with its technology and compliance partner, ShareIn, to automate its secondary market functionality within the coming year.
“As a crowdfunding platform, while we are not allowed, under current regulations, to act as a market maker, we can assist our investors to sell some of their positions at a price they choose, provided there are willing buyers at that price,” said Leech.
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“In due course we hope to acquire a multilateral trading facility licence so that we can improve liquidity and potentially enable investors to access investment opportunities from other litigation funders.
“In due course, there is no reason, in our view, why there can’t be a liquid two-way market in litigation assets similar to the stock and bond markets. Improving liquidity will increase available capital to fund the expensive process of litigation and thereby will improve access to justice while also improving returns on capital for investors.”
Leech told Peer2Peer Finance News that the platform has seen “good demand” from high net worth and sophisticated retail investors for litigation assets.
“We funded a case yesterday after only four hours of marketing, raising £80,000,” he said. “And last month sourced funding of £105,000 after 3 hours of marketing.”
Leech also confirmed that the AxiaFunder platform is raising equity capital under the Enterprise Investment Scheme (EIS) in the near future, and he is also considering using the future fund scheme.