Many accredited investors on our platform are looking to better understand Patent/Litigation Finance; an Investment product with which they may have little to no experience. Here, we outline a couple of important points to give investors a basic understanding of how a typical opportunity is assessed.
The first thing an investment team will look at is the Obligor’s credit rating. Since the borrower is the financially liable party, an investment team needs to make sure that the Obligor – an institution or entity who is contractually bound to make all principal repayments and interest payments on an outstanding debt – is financially stable and able to pay the plaintiff’s award or settlement amount.
We want to ensure that the portfolio is not too heavily concentrated on any one Obligor, in other words, we want to avoid having a single Obligor who has accountability for a high percentage of the portfolio. However, it is possible to consider Obligors with the highest possible credit rating to have more concentration within a portfolio.
Finally, we will look at the LTV (loan-to-value) of a portfolio. This is similar to the LTV you will see on a real estate investing opportunity, as it measures the a ratio of how much has been advanced to plaintiffs vs. the estimated total case settlement value.
Typically, the largest litigation originator, as a matter of policy, will not advance more than 10% of an overall case value and 15% of a net case value.
Disclaimer
Dovera Capital (“Dovera”) do not provide Financial Services, they provide a private capital marketplace by which it may introduce potential accredited investors to asset-based Investee Entities. Any securities or participation interests which are issued or sold, as a result of such introduction, will be issued by the Investee Entity or by another person affiliated with the Investee Entity (for example a current shareholder/founder of the Investee Entity). Dovera is not engaged in a business of providing financial services and does not hold an Australian Financial Services Licence.
Dovera does not provide any financial product advice (whether general or personal) in relation to the securities or participation interests which are offered by or in any Investee Entity or in respect of any other financial product. In particular, Dovera makes no recommendation as to the suitability of any investment opportunity for any potential investor and does not take account of any investor’s financial situation or needs in making information about Investee Entities available to members of private capital marketplace.
Dovera does not provide dealing services in relation to any financial products, including any securities or scheme interests issued or to be issued by an Investee Entity, whether by way of arranging their issue, acquisition, variation or disposal or by any other means.
© Dovera Capital. All rights reserved.
Design by Toneyes