Yep, sounds like you're getting it (i.e. the Fortress SPV) now....

Yep, sounds like you're getting it (i.e. the Fortress SPV) now. It is not an apples-for-apples comparison with balance sheet funding 100% because, as i've explained a couple times, IMF charge Fortress fees for managing their money, and there's the prospect of a large performance fee being paid by Fortress to IMF if the hurdle performance rate is exceeded. Burford actually bought a competitor, Gerchen Keller, late last year because Gerchen Keller had the funds model already in place, and therefore was already earning fees on money third party investor money - see: http://www.reuters.com/article/burford-capital-ma-litigation-idUSL1N1E925M. Key quote from that article: "Gerchen Keller earns a stream of income from the 1-to-2 percent management fees it charges for deciding how to invest the money it has raised. It may also bring in performance fees of 15 to 50 percent if its investment decisions pay off."

The leveraging of fees on other people's money is why IMF is consistently saying that the Fortress deal will "generate a return from the capital it invests in the Bentham IMF Funding Vehicle that is far superior to the return it would expect to achieve by investing the same amount directly into litigation funding assets."

I believe IMF has basically done with Fortress, what Gerchen Keller was already doing. But, instead of IMF spending US$175m of shareholder funds acquiring a funds management platform (like Burford did with Gerchen Keller), IMF has done the hard yards and established its own funds management business from scratch. I am much happier with IMF doing it this way - we, as IMF shareholders, get the equity of the funds management business when the business is internally generated, as opposed to transferring all our money to the founders of another firm (as was the case with Burford transferring its wealth to Gerchen Keller shareholders). By the way, since Burford announced the deal with Gerchen Keller only 3 months ago, its stock price has rocketed up 50%!

http://otp.investis.com/clients/uk/burford_capital/rns/regulatory-story.aspx?cid=1377&newsid=828798

That is the link to Burford announcing the acquisition of Gerchen Keller. They paid up to $175m for a business that generated $9m EBIT in 2016, and they had $1.3bn in assets under management. Let that sink into your head for a second - Burford paid GK nearly 20 times trailing earnings just to get a foothold in the funds management space....and the market are rewarding Burford (given the 50% post-acquisition stock price surge) as though it was the acquisition of the century!

IMF, instead of blowing their brains out and paying 20x earnings for someone else's funds management platform, has gone out themselves and started building their own. Sure, the IMF platform at the moment is only 1/10th of the GK platform (we currently have $150m AUM, they have $1.3bn), but we are in the game and now have the ability to roll that model out for other jurisdictions. This is why i said at the time of the Fortress deal that the market's complete lack of reaction (judging by the fact IMF's stock price is now back to where it was pre the Fortress deal) is perplexing - the Fortress deal, in my estimation, is significantly valuable to IMF in and of itself, and it also provides a platform for IMF to launch other funds and build big value for IMF shareholders.