(Bloomberg) -- North Wall Capital LLP has more than doubled its money from funding a UK law firm’s pursuit of mass claims linked to environmental cases including a Brazilian dam disaster and Dieselgate.
The private credit investor reaped €210 million ($221 million) in profit after US hedge fund Gramercy Funds Management LLC provided a loan that refinanced the €178 million of funding North Wall had channeled to Pogust Goodhead, a London-based legal firm, according to an investor letter seen by Bloomberg. That amount could swell to €470 million depending in part on the firm’s success in winning its claims, North Wall said.
The win for North Wall is evidence of the bumper potential gains stemming from litigation finance, an asset class spawned by demand from plaintiffs for funds to pursue complex legal cases that can yield big returns.
Pogust Goodhead is bringing lawsuits on behalf of UK clients of carmakers caught up in the furore over the use of software to bypass diesel pollution tests.
The firm is also pursuing claims linked to the 2015 collapse of the Fundao Dam in Brazil, which killed 19 people and caused widespread environmental damage.
“We are incredibly pleased to generate outsized returns for our investors from a project set to deliver justice to millions of individuals affected by environmental disasters,” North Wall’s Founder and Chief Investment Officer Fabian Chrobog said in the letter to investors.
The suit against mining giant BHP Group over the Fundao dam collapse will reach trial in October next year. Meanwhile, Pogust Goodhead has already obtained a £193 million ($234 million) settlement in an emissions case involving Volkswagen AG in 2022.
A spokesperson for London-based North Wall declined to comment. The investor letter didn’t provide more detail on the profit generated from the refinancing.
“The fact we have attracted £750 million funding in just five years shows that sophisticated institutional investors have analysed our cases and believe we will be successful,” Pogust Goodhead’s Chief Executive Officer and Global Managing Partner Tom Goodhead said in emailed comments.
The refinancing of the law firm’s credit facility brought a windfall for North Wall’s GCF II legal assets fund, which generated a net internal rate of return of 100%, according to the investor letter.
The firm is in the process of raising its second European Opportunities Fund, notching up about €300 million in commitments so far. The first Opportunities Fund, which also benefited from the Pogust Goodhead deal, had a net IRR of 23% at the end of September.
North Wall will launch a third legal assets fund in the coming weeks, according to the investor letter.
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