AxiaFunder debuts secondary market for trading litigation finance investments

Litigation funding platform AxiaFunder has launched the first secondary market of its kind, enabling investors to buy and sell case investments to each other while proceedings are live.

In a letter to customers, AxiaFunder explained that the market would allow investors to shorten the typical two to three-year holding periods that commercial litigation takes and free up capital if needed.

Buyers meanwhile can now access over a dozen cases that have already been funded through the platform.

“We expect that the Secondary Market will in time become more liquid, which should tend to increase the availability of litigation funding while also lowering its cost,” the company wrote.

Given the sensitivities of commercial litigation, the marketplace will be supervised with rules around equal disclosure of information and a restriction around trading close to key moments in a case like court hearings, etc.

Would-be investors will also have to sign non-disclosure agreements given the confidentiality of case information.

“AxiaFunder will monitor the proposed selling price for each investment. The sale price will depend on several factors including the contractual entitlement of the security over time if the case wins; the prospect of success; and the liquidity & risk preferences of the seller.”

To date, AxiaFunder has financed 13 cases with around £1.9m in funding, two further cases are expected to close in the coming weeks which will increase that figure to £2.5m.

Five of those cases have ended, with an average annualised return of 55 per cent for investors, and eight are still ongoing, with overall expected returns of at least 20 per cent.