Litigation finance specialist Pravati Capital has launched Pravati Credit Fund III, LP to capitalise on opportunities in the burgeoning litigation finance sector.
Litigation finance is the area where participants involved in some sort of legal action either require or desire funding to bridge the gap until settlement proceeds are released. Fund III will continue to capitalise on the success of Pravati’s first two funds and 16 years of specialised experience in litigation finance with a proven methodology of stringent due diligence in selecting and structuring investments.
The strategy aims to build an all-weather fund of differentiated return streams uncorrelated to traditional equities and fixed income based on conservative underwriting mandates for investors. Pravati carefully selects mature stage, high-probability, high-value cases or case portfolios where there is established liability and precedent for settlement.
Pravati has historically only accepted 1 out of every 30 potential investments. Allocations are typically split between law firm portfolios and single event plaintiff cases with the loan rates charged ranging between high teens to mid-30’s depending on the risk.
The new fund is structured with an expected duration of 36-48 months, commensurate with the life of the loans typically held in the fund. Preferred income would be distributed quarterly with principal and additional interest earned to be returned at termination of the fund.
Pravati Credit Fund III has already surpassed its original fundraising goals with private participation vehicles reaching capacity but remains open for investments in the commingled fund. Pravati plans to deploy in excess of USD100 million over the next 12-18 months.
“Litigation financing is more than just a business for us,” says Alex Chucri, CEO of Pravati. “Bridge financing is a critical tool for the average person who may be fighting deep pockets and needs to level the playing field. We want to support that person and the law firm who is behind them.”
Pravati, meaning to “befriend, help, protect, and comfort” in Sanskrit, also aims to positively impact the community. Cases and law firms funded historically include wrongful termination, intellectual property violations, breach of contract, serious injury, commercial litigation, and mass tort.
