Gramercy Funds Management made a $552.5 million secured loan to Pogust Goodhead. This is the largest private credit deal on record with a law firm based in the U.K. — and a major step forward in Gramercy’s litigation finance operations.
Pogust Goodhead focuses on environmental litigation and international consumer claims, and the proceeds from the loan will fund a massive class action against two mining giants — Australia’s BHP Group and Brazil’s Vale — that is expected to go to trial in October 2024 in London. The firm is acting on behalf of more than 720,000 victims of Brazil’s worst-ever environmental disaster — the 2015 Mariana dam collapse, which led to 19 deaths and released about 1.5 billion cubic feet of iron ore tailings in waterways.
The loan proceeds will also support Pogust Goodhead’s litigation against 14 major automobile manufacturers — including Mercedes Benz, BMW, Ford, Jaguar Land Rover and Renault for their role in the so-called Dieselgate scandal. The firm is representing about 1 million U.K. consumers in the case, which alleges the automakers of deploying software to manipulated air pollution tests starting in 2014.
“Allocating to this transaction is clearly consistent with Gramercy’s mission to positively impact the well-being of our clients, portfolio companies, and their communities,” said Gramercy Managing Partner and CIO Robert Koenigsberger. “The investment materially aligns with our ESG and impact investing objectives.”
Greenwich, Conn.-based Gramercy, which recently celebrated its 25th anniversary, is focused on emerging markets and has more than $5 billion in assets under management. Earlier this year, Gramercy named Tom Humphrey, who helped the firm launch its litigation finance strategy in cooperation with BTIG, to the role of president.
Other firms banking on litigation finance include Hedonova, Monroe Capital and Calumet Capital and the appropriately named Legalist. Allocators are also taking notice, with Harvard University’s endowment investing $500 million in a publicly offered litigation strategy form IMF Bentham and the University of Michigan endowment committing $80 million to opportunistic credit shop HighVista.
“This transaction with Gramercy, a firm with deep expertise in litigation finance and patient capital, gives us the ability to bring the fight to any wrongdoer,” said Pogust Goodhead Chairman Harris Pogust. “They are now on notice that it is in their financial interests and those of their shareholders to settle or face a firm with both the financial resources and litigation skills to obtain the justice our clients rightly deserve.”
Tom Goodhead, global managing partner and CEO of Pogust Goodhead, took pains to notice the firm’s goal is not “to destroy these companies,” but rather to take them account “for corporate misconduct, anti-competitive behavior, corporate harm and misuse of the environment.”