budget
I am not sure exactly what a placement agent will do for IMF-Bentham.
I am not sure if some sort of special product placing/development is envisaged. A litigation funding parallel to a property REIT - a "LFIT" say for raisings in the USA?
With the dearth of yield in the the world at the moment junk-bonds are floating well, so that seems the path forward.
A clue perhaps is in Sakers paragraph before the one quoted. At one time IMF-Benthan were picking up good deals, and agreeing to the funding on an oh-bugger basis. Once enough good deals were agreed to, IMF-Bentham would then say "oh bugger" we need to source adequate funding.
A bit ad hoc...
Progressively IMF-Bentham is seeing that they are a essentially financiers, tho' of a very special type. The normal structure for funders is to collect short term funding, for longer term on lending. This is done by doing wizardry in the balance of risk.
That places IMF-Bentham in an awkward position, as bankers out reach them on both sides, i.e. the bankers borrow usually short term to no longer than 5 years, and on lend on sound collateral from mostly 10 years and outwards.
IMF-Bentham will never match that, in the legal sphere - their realm of operation. To do so, it must source funds to re-invest within the two and a half year it takes, on average, to turn a case.
It ain't going to happen.
So despite financing being a vital aspect to IMF-Bentham trade, their value-add MUST always include a good dollop of return for their active legal acumen and strong judgement into what cases they must invest in. Meaning, I don't think IMF-Bentham, that IMF-Bentham can ever become passive financiers. IMF- Bentham will always be more like miners than bankers.
That may seem obvious, but perhaps it needs to be said.
But I do like that Saker/ IMF-Bentham FIRST thinking what are our sources of capital THEN thinking what they are capable of doing with their capital
In this regard, IMF-Bentham has historically charging the Litigation Contracts in Progress the cost of their debt. As per note 16(e) in 2015 were they charged 6.77% This only approximates IMF-Bentham's Effective Interest Rate on debt for 2015. That isn't good enough, as funded Litigants, whose case fails, are receiving a free endowment from IMF-Bentham, for taking a risk at court. I know that is the product offering by IMF-Bentham, but if a margin is not achieved by IMF-Bentham, IMF-Bentham's shareholders pay.
I've argued on this platform that the appropriate capitalisation ought rather match the extra points to reach as least IMF-Benthams to reach internal WACC (at least)
In the 2016 accounts note 16(e) has been clipped!
Not stated is now Fixed Rate Notes @ 7.4% So good?
The basis of capitalisation is not stated.
I think this is some step towards progress.
What is unwritten in IMF-Bentham financials is that it has been 'blessed' with some pretty patient equity investors. It's beta and ungeared beta relative to the ^AORD shows some docile & rather pacific pricing. The beta that IMF-Bentham price achieves on the market matches that of some solid utilities. I'll not speculate why this is so, but I doubt it'll last.
Finally it doesn't make sense sourcing Australian capital to fund American expansion. The USA is the wholesale market for capital, and raising funding in Australia comes at an additional cost.
The caveat to the current Bentham Bonds issued in April 2014 has a secured debt limit (ASD$ 150 m, I think) of which $79,5 has been exploited as yet. IMF-Bentham has capital constraints.
But then, while such complacent docile Australian funding is available, the next issue ought exploit our market?
