Ares Management Corp. closed a deal to acquire a 70% interest in an Omni Bridgeway litigation finance fund for a total investment of around A$320 million ($204 million), the companies said Tuesday.
The deal is one of the largest secondary market transactions in the litigation funding industry, according to the companies. It marks $525 billion alternative investment manager Ares’ first litigation finance investment from its Asian special situation strategy.
The transaction establishes Omni Bridgeway Continuation Fund 9, which purchased co-investment interests across a portfolio of more than 150 legal assets—or cases backed by the fund—originated and managed by Omni Bridgeway. Ares paid more than three times the amount that Omni Bridgeway put into the cases, according to the funder.
“It shows that if you have a good portfolio of legal assets that’s truly diversified, well managed, well originated and underwritten, then there are very deep pools of capital available that are willing to invest in that portfolio,” Omni Bridgeway CEO Raymond van Hulst said in an interview.
Van Hulst said it’s also the industry’s first continuation fund, a vehicle that allows a sponsor to continue to own an asset and offer liquidity to investors and access to others.
Ares manages assets across credit, real estate, private equity and infrastructure classes. Omni Bridgeway has approximately A$3.5 billion in cumulative capital raised across 11 funds and has been listed on the Australian Stock Exchange since 2001.
Assets
The new fund’s assets are largely composed of single cases from Omni Bridgeway’s earlier funds and do not include law firm or corporate portfolios. The cases cover all the areas of law that Omni Bridgeway tends to invest in, including intellectual property, arbitration, and contract disputes. They are spread evenly across the US, Asia Pacific and Europe, the Middle East and Africa and range form 2018 to 2024.
Jan-Paul Kobarg, the Ares partner who led the deal, said the company was interested in a portfolio but the transaction needed to be large.
“For Ares, we need scale, we need sizable deals to justify the bandwidth, the money we invest into a transaction,” he said. “There are not a lot of comparables around. That’s where Omni Bridgeway stood out for us.”
The deal’s announcement in December prompted questions about whether Ares planned to start directly funding cases.
“Unfortunately, the answer is not ‘yes,’” Kobarg said. “When you have this approach that we took here, you really don’t want to take single case risk. You want a diversified portfolio and there are not a lot of firms around that have the scale and breadth of a portfolio available that Omni Bridgeway was able to offer us at the time.”
Diligence
Ares and Omni Bridgway began discussing the deal in the first few months of 2024. After they signed a term sheet, Ares began a six month due diligence process with the help of lawyers from UK firm Clifford Chance.
The review involved three phases, Kobarg said. Ares analyzed the financial outcomes of more than 400 completed Omni Bridgeway cases. It also looked at Omni Bridgeway’s valuations for the portfolio and assessed the company overall.
The diligence was also important to the funder. Van Hulst changed the company’s valuation system when he took over in 2022, he said. Investors then wanted to see how Omni Bridgeway’s valuations funds compares to those performed by an independent, third party.
Omni Bridgeway had been financing a part of its growth through a corporate debt facility, which Van Hulst wanted to repay.
“My firm belief is—having been in this industry for 25 years now—that this is a fantastic asset class, but you don’t want to finance this with debt,” he said. “You want a capital structure that’s matching the risks and the profile of the assets.”
Market Volatility
Litigation finance gives Ares access to high-return deals that Kobarg said are unrelated to what’s happening in the market. The returns are based solely on the outcome of the cases in which funders invest.
“One thing that stands out and that is rare these days is you have truly uncorrelated risk here,” he said. “That risk does not move up and down depending on how the markets move.”
Litigation finance is an attractive asset as a US-led tariff war brings turbulence to markets, van Hulst said. Breach of contract suits are likely to rise as tariffs are ratcheted up, he said, sparking more demand for outside funding in those cases.
“Those are the kind of swings that typically drive disputes,” he said.
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