The following article by Adrian Ezquerro featured in The Australian, 26 October 2011.
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IMF is the largest litigation funder in Australia and the first to be listed on the Australian Securities Exchange.
COMPANY: IMF (Australia) Limited Convertible Notes
ASX CODE: IMFG
INDUSTRY: Diversified Financials
SHARE PRICE: $1.68
FORECAST 2012 DIVIDEND: 16.8c
IMF (Australia) Limited Convertible Notes trade under the code IMFG and pay quarterly dividends. The underlying business, IMF, is a publicly listed company providing funding of legal claims and other related services, in Australia and in other jurisdictions, where the claim size is more than $5 million. IMF’s convertible notes were issued at $1.65 late last year. The term is four years with interest paid at 10.25 per cent. Each note may be converted into an IMF fully paid ordinary share at quarterly intervals at an exercise price of $1.65 per note.
The company indicated that the funds arising from the issue were to be used to “aggressively pursue its announced aim of increasing cases under management to its target of $2 billion”.
IMF recently announced strong results for this year, with profit up 92 per cent to $22.9m. IMF’s present portfolio has grown to an estimated claim value of nearly $1.8B, spread across the next three years. It has an enviable track record of success and has lost only five cases out of the 123 undertaken since listing, with many settled before reaching court. The fundamentals of the underlying IMF business are sound. The balance sheet is strong, with a good amount of cash on hand. IMF has enjoyed a healthy level of profitability and, although historically lumpy, the company has averaged normalised return on equity of more than 30 per cent across the previous five years.
IMFG recently declared a quarterly dividend of 4.2c a share. This represents an attractive annual yield of more than 10 per cent.
Source: The Australian, 26 October 2011
