IVO Capital Partners launches €150 million fourth litigation finance fund amid surging European demand

IVO Capital Partners has launched its fourth litigation finance vehicle, the IVO Legal Strategies Fund IV, an Article 8 SFDR fund targeting €150 million for deployment across Europe and beyond. The fund mirrors the strategy of its predecessor but will seek to deepen IVO’s foothold in continental Europe, leveraging more than a decade of experience in litigation finance.

“This fund follows the successful deployment of our third litigation finance vehicle and mirrors its strategy which was focused primarily on continental European cases, a highly diversified portfolio and an AIFM structure that allows for a broad investor base that consists of professional and qualified investors,” said Paul de Servigny, Head of Litigation Funding at IVO Capital Partners. “The rise of mass claims across Europe has created a strong pipeline of investment opportunities, and we are well positioned to capitalise on this growth given our extensive network and successful track record across Europe and beyond.”

As an Article 8 SFDR fund, IVO Legal Strategies Fund IV integrates environmental, social, and governance considerations into its investment process. “As an Article 8 SFDR fund we are required to set certain positive and negative screening criteria when analyzing cases,” de Servigny said. “The negative criteria set in the fund’s bylaws include certain countries and industries where we will not invest. Regarding the positive criteria, these are focused on three key aspects, improving the efficiency of institutions which is providing for access to justice to claimants, and generating wider positive social impact.”

The fund will focus on Germany, Spain, the Netherlands, France, and the United States, with a portfolio that spans consumer, competition, and financial-services claims. “They are mostly collective claims, opt out claims in the Netherlands and an opt in claim in Spain, France and the United States,” de Servigny said. “The case in Germany is a single claim brought by an SME.”

De Servigny highlighted IVO’s decade-long presence in the sector as a differentiator. “IVO has been active in the space since 2014, with activity in Continental Europe as of 2020 in collective cases and single cases which today represent more than 40% of all of IVO’s investments,” he said. “We have been involved in some of the key jurisdictions from an early stage, such as the Netherlands and Spain, and have provided a flexible approach to funding European cases with an investment ticket size that is very broad.”

“Investor interest in our new fund is strong because of our European focus and track record,” he added. “We are fairly unique and investors also like that in addition to Continental Europe we are investing in the right cases in the UK, the US and Asia.”

Amid market volatility, de Servigny sees litigation finance as an increasingly attractive diversification play. “The current market uncertainty and volatility makes the asset class an attractive diversification tool,” he said. “Investors like that the outcome of cases, both in terms of damages and duration, are not correlated to macro or micro economic factors or the fluctuation of interest rates.”

He also pointed to Europe’s evolving legal frameworks as catalysts for growth. “When looking at collective opt out cases, the Netherlands and Portugal are leading the way,” he said. “The case law has been developing which is providing greater clarity for claimant foundations and funders. Crucially the use of funding is growing and being recognized as fundamental by all jurisdictions.”

On evaluating risk in collective actions, de Servigny said: “We aim to reduce binary risk and ensure that we have as much visibility as possible on the possible return that can be achieved. Leveraging this ‘public enforcement’ aspect is key to funding collective cases.”

He welcomed the implementation of the European Representative Actions Directive, calling it “very positive for access to justice and for upholding the rule of law.” He added, “We are hopeful that the practical implementation of the directive in France, which has been recently transposed, will encourage qualified entities to bring more collective cases with the support of funders in order to enable a strong collective redress system to develop in Europe’s second largest market.”

De Servigny also emphasized IVO’s role in promoting industry standards. “If we want the asset class to continue to grow and become more institutionalized, we need to encourage best practices across the board and our involvement in ELFA and ILFA is driven by this objective,” he said. “Transparency is key to normalising the use of funding in litigation that will remove the unnecessary debate systematically brought by defendants regarding the involvement of the funder which causes delay and increases costs.”

With IVO Legal Strategies Fund IV, the firm is building on its established reputation as one of Europe’s leading litigation finance managers. As de Servigny concluded, “We will continue to work with government bodies to educate them on the role and functioning of funders in different types of cases to ensure they have a proper understanding of how funding works and the diverse business models and approaches in the litigation funding industry.”