Julian Roberts: Thanks very much, guys. It was extremely clear. I’ve got another question too, which I think the answer to it would probably be no, I’ll tell you, but you’d rather [technical difficulty]. Thanks again.
Christopher Bogart: Thanks, Julian.
Operator: Thank you. Our next question comes from Alexander Bowers from Berenberg. Alexander, your line is now open. Please proceed.
Alexander Bowers: Hi, three questions from me. The first one I think might have been answered by Julian’s question already to some extent but I’ll ask it anyway. Just I guess in terms of competition, are you seeing any change in level of competition for sort of the claims you’re competing for and has that had any sort of impact on sort of level of pricing that you offer? The second question, I’m not sure whether you’ll be able to answer or not, but I’ll ask it anyway. Just on YPF, I’m trying to ask about your appetite to do sort of further sales to third parties. I believe you are able to sell it roughly to 10% more to Petersen’s stake and I’m not sure whether it’s been disclosed about Eton Park, could be sold down or not, but any more visibility on that would be great.
Are you able to provide it? And just sort of lastly on performance fees. I was wondering whether you’ll be able to give sort of view as to level of performance fees you expect from the funds. I think that before the accounting change, you used to have sort of probabilistic model, but kind of given out a view of that and sort of linked to that, could you give us a sort of view as to what the impact performance fees are from the YPF outcome potentially? Thanks.
Christopher Bogart: Sure. So, I think all three of us will take those. Jon, why don’t – are you willing to talk a little bit more about competition and pricing?
Jon Molot: Sure. So, I’m happy to, and I’m actually happy to report that I do not feel like we are in a particularly difficult moment when it comes to price competition. I think that – I’ve talked about this over the years, that I think that the entry over – the years we’ve been in business, our competitors have been very good for us because it just has expanded awareness of the market and made this a true market even though we have remained throughout the market leader and sometimes there is sort of a new fund that pops up out there and is the flavor of the month and I’ve talked about how there’ll be a period where all of a sudden we get a flurry of calls that they have been reached out to by this new competitor and then they reach out to us as well and realize actually we’re a better fit for them.
I think at this moment, if anything, competitors have faced headwinds or some sort of retrenchment. Somehow, a combination of our scope and scale, our expertise and track record, our permanent capital, and our capital structure, all of those things have positioned us in a way that some of our competitors, particularly the ones that are entirely relying on Two and Twenty capital, they just had a harder time keeping up. So it’s there. There are companies that sort of are out there. But I just – I haven’t found that our counterparties whether law firms or corporates when coming to us are saying, we’re going with whoever is cheapest and there is somebody out there that’s cheaper than you. That’s just has been our experience, that – and they would rather do business with us, and we have to make sure that our deals make economic sense, right?
You’re never going to go to any business unless you’re offering something of value and it’s a win-win for both parties and that’s always been the case for us. But I’m actually feeling quite good about the competitive landscape at the moment.
Christopher Bogart: Great. Thanks, Jon. On YPF, I think in terms of appetite for further sales, you are right that we’ve got 11% or 12% left of the Petersen entitlement that we could theoretically sell down. We always look at across the portfolio when we think about liquidity and market opportunities. But at the same time, I think we like this asset an awful lot. The prior sale took us off risk and booked a very comfortable profit. So, even at the current levels of spend in that case, we’ve already locked in something like a 3x or 4x return, and so, I never say never, but it’s certainly not something that you’re going to see us doing tomorrow either. And Jordan is going to talk about performance fees, but just before he does, you asked not only in general but about YPF.
Just as a reminder, YPF is a balance sheet asset. So, we did the YPF deal before we were in the fund business. And so, there is no participation by firms – by funds like BOF-C. I get a lot from investors a question based on media speculation. And the media speculation is that as part of the 2019 secondary sale, that the LPs in BOF, one of our Two and Twenty managed funds, elected to purchase a part of the secondary offering. The only way that could have happened if it did happen was if the LPs made the decision to do it. We obviously couldn’t sell a portion of our interest to one of our own funds and we’ve never confirmed nor do we have the ability with the fund confidentiality to confirm whether that happened or not. If the media reports are correct, then there is possibly some performance fee potential from a holding of a portion of the secondary sale in BOF.
But even if that did occur, it would be far from a majority of the secondary sale. And Jordan, more generally about performance fees.
Jordan Licht: Yes. Look, I think you’re referring to – we don’t give guidance, but you’re referring to a couple of quarters ago when we gave the overall view of performance fees. I don’t see that changing materially or we’ll continue to use the funds in the same manner that we have been with the various kind of entry points of whether it’s managing the balance sheet with BOF-C or managing some of the lower-yielding assets and opportunities to place that. So – but I don’t have a specific guidance number to give you.
Christopher Bogart: And next, we’ve got a webcast question from Dennis Troy. Chris mentioned Burford is barely a teenager in the litigation and finance industry, does this YPF ruling take Burford into adulthood? And does it meaningfully improve Burford’s competitive position for new commitments at all? So, I think the answer is, yes, in the following sense. The – when we started this business 14 years ago, the challenge that we faced then was an educational challenge. People didn’t know what this idea was really, they weren’t accustomed to using capital like this. And so, the first half of our life, anyway, to talk to the analogy of the childhood years, were spent really educating the legal industry about what they could do with capital and of course, having educated them, then being the capital provider to them.
