Burford Capital posts 19x growth in earnings per share to $2.74 in 2023

LONDON, UK: Burford Capital Limited, a premier global finance firm specializing in law, has reported its full-year results for 2023, showcasing significant gains across the board.

Christopher Bogart, Chief Executive Officer of Burford Capital, commented: “Burford had an extraordinary year. Our earnings per share rose 19x to $2.74, driven by a tripling of consolidated total revenues to $1.1 billion in 2023 due to significant growth in capital provision income, with and without our YPF-related assets.

We achieved a Burford-only net income margin of 63%. With the courts fully back in business, we had an active year and we anticipate further substantial levels of activity in 2024 and 2025. Increased portfolio velocity was reflected in record core legal finance realizations, cash receipts and realized gains, as well as sizeable unrealized gains arising from the portfolio moving forward. Our ROTE soared to 32% in 2023 from 2% in 2022, and we increased tangible book value by 34% to $9.85.”

The company’s realized gains surged by 40% to $186 million, a substantial increase from the previous year’s $133 million, despite no contributions from YPF-related assets. This uptick is part of a broader trend of robust realizations, which climbed by 42% to reach $496 million, reflecting an accelerated portfolio turnover as court backlogs diminish.

Burford’s cash receipts witnessed a remarkable 49% increase, totaling $489 million, comfortably surpassing the firm’s total operating expenses and finance costs. However, deployments saw a 16% decrease to $382 million, attributed to a strategic shift in business mix and the swift settlement of a significant matter in 2023, which resulted in an impressive 37% internal rate of return (IRR).

The firm’s commitment to new ventures grew by 4% group-wide, hitting the $1.2 billion mark, although Burford’s direct new commitments dipped by 5% to $691 million, with BOF-C securing a larger share of new commitments.

The total portfolio value expanded by 17% to $7.2 billion as of December 31, 2023, bolstered by considerable fair value gains and an increase in deployments and undrawn commitments. This growth propelled total revenues to an astounding $977 million, a key factor in the company’s significant earnings expansion.

Notably, realized gains on total capital provision assets stood at $187 million for FY23, driven by capital provision-direct assets, marking the firm’s highest returning core legal finance strategy. Excluding YPF-related assets, unrealized gains on capital provision assets soared by 120% to $158 million, reflecting positive portfolio progression.

YPF-related assets alone generated $543 million in unrealized gains in FY23, primarily due to favorable judgments in the first and third quarters of the year.

Operating income reached $708 million, a 290% increase from the previous year, primarily due to the surge in total revenues. Operating expenses were reported at $269 million, including nearly $130 million of non-cash accruals and one-time or case expenses, indicating a decline in total operating expenses as a percentage of total revenues to 27% in 2023 from 49% in 2022.

The increase in portfolio value, including unrealized gains on YPF-related assets, led to a rise in accrued compensation expense associated with carried interest. Long-term incentive compensation, which includes accrued expenses and related employee benefits, is payable upon the receipt of cash proceeds from net realized gains of capital provision assets.

Net income for FY23 was reported at $611 million, constituting 63% of total revenues, with net income per diluted share at $2.74, a significant leap from $0.14 per diluted share in the previous year.

The tangible book value attributable to Burford Capital Limited stood at $2.2 billion at the end of 2023, up from $1.6 billion the year before, with the per-share value increasing by 34% to $9.85, primarily due to strong earnings.

Lastly, Burford-only Return on Tangible Equity (ROTE) for FY23 was an impressive 32%, compared to just 2% in FY22, marking a year of exceptional financial performance for the company.

Burford Capital’s management team invest $3 million in the company stock