Ares Targets Litigation Finance in Deal With Omni Bridgeway (2)

Ares Management Corp. is making its first known entry into litigation finance through an agreement announced Wednesday with Omni Bridgeway.

Ares, an alternative asset manager that last week won National Football League owners’ approval of a 10% stake in the Miami Dolphins, is acquiring a stake in Omni Bridgeway’s ongoing investments, according to an Omni statement.

Omni Bridgeway is publicly listed on the Australian Stock Exchange and calls itself a global leader in litigation finance. The company invests in the upfront costs of lawsuits for a chance at returns should the litigation prove successful.

Under the agreement with Ares, a new fund is being created to include more than 150 Omni co-investments. Ares will acquire a 70% interest in the new fund for A$310 million. Omni will have a 30% interest in the fund, according to its statement.

The deal allows Omni to become completely debt free and gives it access to deep pools of capital, Raymond van Hulst, the company’s managing director and CEO, said in an interview.

“This is probably the first time there’s been a transaction of this scope,” said van Hulst. “It’s one step further for legal assets becoming a more regular and accepted asset class.”

He said Ares spent about six months doing diligence for the transaction and secondaries and continuation funds are part of the industry maturing.

“What it exemplifies is the fact that the industry is becoming more varied, more sophisticated and attracting more categories of capital,” said Rebecca Berrebi, a litigation finance broker and consultant. “Different structures are emerging for secondary pieces of portfolios and cases.”

Funding transactions such as the one Omni announced with Ares have become a growing part of the litigation finance marketplace. Gerchen Capital Partners, which specializes in purchasing existing claims, closed on a deal in June 2022 with Omni Bridgeway for the purchase of a $38 million fund.

Last year, litigation funder Parabellum Capital sold partially-realized and unrealized assets from its first fund for nine figures to an undisclosed buyer. Woodsford Group Ltd., a UK litigation funder, also sought to sell its portfolio of passive US investments last year.

Omni Bridgeway will be an adviser on the new fund with Ares and it has the option to acquire up to a $35 million equity stake in the company through the issuance of warrants at an agreed strike price, according to the statement.

A representative for Ares declined to comment. Ares has approximately $464 billion of assets under management and offers investment solutions across credit, real estate, private equity and infrastructure asset classes.