Litigation funder JustKapital buys into US ambulance chasers
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Litigation funder JustKapital has bought 70 per cent of US ambulance chaser investor National Health Finance (NHF).
The debt and equity-funded $US68 million ($85 million) deal is conditional on JustKapital securing a new debt facility, shareholder approval and a successful equity raising.
Of the total, $US3 million will be paid out as shares to NHF founders Dave Wattel and Dr Mark Siegel, who will keep 30 per cent of the US business and continue to manage it.
JustKapital (ASX:JKL) chairman Philip Kapp says the latest acquisition should provide an immediate earnings boost, as they start to look overseas for growth.
Both companies fund litigation actions, but NHF is focused on the US health sector. It’s one that Mr Wattel says is worth more than $11 billion; NHF finances less than 1 per cent of this.
JustKapital signed a non-binding term sheet for a global, two-tranche loan from an unnamed international credit fund. It includes a facility for acquisitions and one for refinancing existing debt.
At the end of the 2017 financial year, the company was carrying just under $40 million in both short term and long term debt, on revenue of $22.4 million.
That international debt facility was one of the key motivators for NHF.
“The proposed global funding facility contemplated as part of this transaction allows NHF to significantly increase funding capacity to increase NHF’s share of this market opportunity,” Mr Wattel said.
JustKapital has been developing its health litigation funding for some time. buying Macquarie Medico Legal in 2016.
The company hasn’t come out of a trading halt yet, but last traded at 16c. It has a market value of $20 million.