A Collateralized, Non-Correlated, Income-Generating Alternative Investment for Investors Seeking Diversification
Litigation finance is fast becoming the most relied-upon way for attorneys and plaintiffs to get the financial backing they need to fight cases. In 2016, The New Yorker reported that 28 percent of lawyers surveyed had relied on litigation finance to help fund cases.
And, while that represents a 400 percent increase in the number of private practice lawyers using litigation funding in 2013, we believe that this multi-billion-dollar market has barely scratched the surface of the $127 billion generated annually on various litigation claims. It’s this explosive combination of rising popularity and relatively untouched potential that prompted Pravati Capital to introduce its new, special purpose vehicle fund, the Pravati Credit Fund III LP (a 506(c) offering).
A Non-Correlated, Alternative Investment
The Pravati Credit Fund III LP is for investors seeking a unique investment strategy that is unconstrained and uninfluenced by broader markets. We believe that this fund is a viable alternative for those looking to truly diversify their holdings and hedge against the volatile market swings that have unnerved investors over the past decades.
We have created the Pravati Credit Fund III LP so that it is not restricted by market performance. The Pravati Capital team has a history of delivering strong returns through both high and low market cycles.
A High-Return Fund for Income-Seeking Investors
Through its distinctive, dual-return income structure, the Pravati Credit Fund III LP offers income-seeking investors a fixed quarterly income and an equity kicker component. With an 8 percent preferred return, which we anticipate we will pay quarterly, eligible investors will be eligible to receive a fixed quarterly income which exceeds current bank interest rate yields.
Focus on Conservative, Collateralized Funding
The Pravati Credit Fund III LP places great emphasis on the strength of the Pravati Capital underwriting team. The experience of our underwriters allows us to fund what we believe will be highly probable mass tort, commercial liability and personal injury cases with a strong likelihood of settlement. We seek to follow this approach to lower risk and increase total settlement amounts.
Additionally, the funds used for litigation financing are collateralized by either the law firms legal fee or the plaintiff’s future settlement.
Funds are often great choices for investors seeking diversification of assets and we believe that the Pravati Credit Fund III LP is no different. We anticipate using funds raised to invest in a broad range of cases, each with what our underwriting believes will have a high probability of success. In addition, by investing in a wide variety of cases, we anticipate that settlements will constantly occur, which will keep returns flowing into the fund.
A Great Choice for Social Impact Investors
The asset-backed bridge capital provided to plaintiffs and law firms by the Pravati Credit Fund III LP helps level the playing field in court, giving wronged consumers, patients and others the ability to hold drug manufacturers and others accountable.
Ideal Investment Transparency
The Pravati Credit Fund III LP is a diversified fund of financed litigation cases that are continually monitored and cross checked. Pravati Capital shares this information with investors through timely and accurate valuations and performance updates. We use third-party administrators, auditors and legal counsel to ensure the protection of our investors’ capital.
The Pravati Difference
The Pravati Credit Fund III LP is conducting a 506(c) offering solely to accredited investors. We seek to provide investors the opportunity to break into the relatively untapped litigation finance market through our exciting alternative investment vehicle.
As with any alternative investment, it’s important that investors understand the unique risks involved as well as weighing the potential benefits against those risks and understanding the risk hedging measures taken by fund managers.
The Pravati Credit Fund III LP doesn’t just offer a quarterly fixed return to its investors with a preferred return that exceeds traditional fixed investments. The fund does so by using proprietary underwriting measures and fully collateralized litigation funding.
A NOTE TO OUR INVESTORS: We report quarterly on the performance of the fund. Reports are issued within two weeks of the end of each quarter. Further, investors will receive their own private communication reporting on their respective capital account balances.
SECURITIES DISCLAIMER: The Pravati Credit Fund III LP 506(c) private placement offering referenced above is being made only to accredited investors that can bear the economic risk of their entire investment for an indefinite period of time and that can afford to sustain a total loss of their total investment. The information set forth above does not constitute either an offer to sell or an offer to purchase securities. No investor funds will be accepted absent the execution and delivery by each investor of final definitive legal agreements.
Pravati Credit Fund III, LP
The Pravati Credit Fund III LP is conducting a 506(c) offering solely to qualified & accredited investors. We anticipate providing investors with the opportunity to participate in a well-diversified fund dedicated to litigation funding and seek commitments of up to $50M. The Pravati Credit Fund III LP is a non-correlated alternative investment vehicle which offers dual streams of income. The first is a fixed quarterly preferred return. The second income component is an equity payment that is triggered after portfolio assets are settled. The Pravati Credit Fund III LP is backed by the power and experience of the Pravati Capital team, which has a 16-year history of successfully underwriting and funding litigation.
The Pravati Credit Fund III LP provides its investors with quarterly reports and annual audited financial statements. Additionally, the parent company—Pravati Capital—has a 16-year history in litigation finance, funding over 5,000 cases, each of which has been fully audited by third-party auditors.
A Diversified Fund Strengthened By Cross-Collateralization
Rather than relying on the strength of a single case to deliver results to our investors, the Pravati Credit Fund III LP cross collateralizes its holdings keeping multiple, thoroughly-vetted cases within the fund. We believe that this approach to risk mitigation creates a fundamental fund diversification that complements the built-in equity buffer created by Pravati’s limiting funding to a percentage of anticipated case award.
Cross-Collateralization: Starts with finding high-probability cases
It’s not enough for a litigation finance fund to be cross collateralized, even if one winning case can cover losses. For a fund to have true protection and superlative returns, we project that each case needs to have a high likelihood of success—and that’s where Pravati Capital’s underwriters come in. With a combined total of 16 years’ experience, our underwriters not only understand how to evaluate the strength of individual cases, they also recognize prevailing trends in litigation, settlements and mass tort awards.
Fund managers for the Pravati Credit Fund III LP look at multiple factors before deciding whether a case is qualified to fit in the fund. Not only do we look for high-probability cases, but we look for those with a variety of elements and estimated maturity dates. That means our fund intends to hold a combination of personal, commercial and mass tort cases from all over the country for a diverse set of possible judgments and timelines.
While litigation finance has enjoyed decades as a popular investment opportunity in countries like Australia and the UK, it’s a relatively new industry opening up for investors in the United States—and it’s about time. Some groups, such as the American Bar Association, have traced the concept’s roots as far back as 476 AD. For Pravati, a 16-year pioneer in this space, it’s been amazing experiencing, helping to influence its growth here in the U.S.
The concept of litigation finance is grounded in the desire to create returns for investors while leveling the playing field for plaintiffs and lawyers going up against multi-national corporations with an ethical responsibility to provide safe products, drugs, employees, locations and experiences. Because the strengths of this type of non-recourse funding is reliant on the success of the cases, only strong cases are funded, helping ensure that our courts are busy with highly-probable cases.
Since its start in the 1990s, the United States litigation funding market has seen growth of $3 billion, as reported by The New Yorker. Further, understanding that some form of oversight is beneficial to all parties involved, the industry has begun to strictly regulate itself through organizations like the American Legal Finance Association, an organization that Pravati Capital’s CEO served 3 years on the executive council.
Seen as a benefit both to plaintiffs and to lawyers who want to grow their firms while representing litigants on a contingency basis, the litigation finance industry has grown significantly in recent years, and only shows signs of continuing to expand.
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