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IMF Bentham share price volatile after settlement update

The IMF Bentham Ltd (ASX: IMF) share price has been volatile in early trade after the litigation group announced a binding settlement this morning.

What did IMF Bentham announce?

IMF provided an update on its 19 July 2019 announcement regarding the confidential partial settlement of an Australian investment, in which IMF said it expects to receive revenue of $7.5 million.

IMF confirms that a binding settlement has been reached with the remaining defendant, meaning the litigator expects to receive a further $1.8 million, resulting in aggregate revenue from this balance sheet investment of $9.3 million.

While exact figures are not yet available, IMF said that it will make only a small profit from this investment, which has settled mid-trial without any exposure for IMF to adverse costs.

Had the trial proceeded to completion and the client been unsuccessful, IMF said that it may have had significant exposure to adverse costs, and therefore higher risk.

Who is IMF Bentham?

IMF is one of the leading global litigation funders, headquartered in Australia and with offices in the United States (US), Canada, Singapore, Hong Kong and London.

The company has built its reputation as a big-name provider of innovative litigation funding solutions and has established an increasingly diverse portfolio of litigation funding assets across Australia and the globe.

IMF has been a big player in the Aussie litigation funding scene since 2001, playing a significant role in the initial steps towards a globalised industry via its international expansion in the US, Canada, Asia and Europe.

How has the IMF share price performed this year?

The IMF share price is currently trading at $3.47 per share and has climbed 11% higher since the start of the year.

Following the 2018 Financial Services Royal Commission fallout, speculation was rife that IMF could cash in on the raft of potential class actions to be filed against the banks from various stakeholders.

This saw the IMF share price surge 20% in 3 weeks, but the company’s share price performance has trailed that of the S&P/ASX 200 (INDEXASX: XJO) index and the litigator currently boasts a market cap of $708 million.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.