Okay, welcome, everybody, and thank you for joining us today at the Sidoti Year-End Conference. My name is Brendan McCarthy, and I'm an analyst with Sidoti, and I'm very pleased to welcome Omni Bridgeway. The ticker is OBL. Joining us from the company today will be CEO Raymond van Hulst and Head of Corporate Development Nathan Khandarkar. And before I hand it over, a quick reminder that the Q&A tab is located at the bottom of your screen. Feel free to type in any questions throughout the presentation, and we can save time for a Q&A at the end. But with that said, I will hand it over to Raymond.
Thank you, Brendan, and welcome, everyone. I'll quickly take you through OBL as a company. I am not sure to what extent you're all familiar with legal finance or legal assets, so I'll go through that very quickly. We are a global legal assets investor or legal finance provider, litigation funder. It goes by different terms. Essentially, what we do is we provide non-recourse capital for legal proceedings or legal assets, which is contingent upon a successful outcome of either litigation or the outcome of legal claims. We have been doing that since 1986, so we're nearing 40 years next year, and have been listed in Australia since 2001, so getting close to 25 years there. We started off historically as a balance sheet funder and have transitioned 10 years ago from balance sheet to fund management.
As of today, we are 100% fund manager, no assets anymore directly on the balance sheet. Omni Bridgeway has 11 closed-end private capital funds in which we co-invest typically 20% and get a carried interest and a management fee out of those funds. I'll go through all the other aspects of the high-level description, but we're a global firm. We are in 15 countries, have a global investment team of over 150 people, and currently have about AUD 5.2 billion in assets under management. When I'm talking about numbers and dollars, apologies, but those will be Australian dollars, not U.S. dollars. So first, a little bit more on what are legal assets. The unique aspect of legal assets is that they are uncorrelated, and I appreciate that's probably the most overstated term in asset management, but for legal assets, I would say that's correct.
The outcome of our assets depends on the outcome of legal proceedings and court decisions and is not connected or correlated with financial or capital markets. It's binary and asymmetric, so our typical investment profile will be either we lose our investment or we lose the legal proceedings and lose our deployment in that investment, or we're successful and we'll get a multiple on our investment, which can be typically three, four x money multiple, and in particular cases, that goes up to much higher multiples. Given that our overall success rate, financial success rate, is about 75%, that creates a very asymmetric and attractive return profile. Our assets are self-liquidating. That increasingly is a differentiator. It's the court processes that will define what an asset completes, and that's typically between three and five years. We don't control that.
We don't control whether the defendant will appeal or there will be a Supreme Court proceeding or whether they will apply delayed tactics or will settle early, so that is one of the key uncertainties that we manage, but the long-term average is low in that three to five year period, and finally, it's countercyclical in its supply. Typically, periods of market distress, economic displacements will lead to an increased flow of applications for our funding, so whether it be the COVID period or whether it's a great financial crisis or commodity price shocks, those events will typically lead to increased litigation and increased demand for our funding and therefore for legal assets, so that combination of those four characteristics makes legal assets quite an attractive asset class as a real diversifier in the portfolio. As an asset class, again, this partially overlaps with the prior slide. Very attractive high returns.
We underwrite at about 35%, two-three x returns. I'll get into our historical track record on that a bit later. Correlation we've discussed. Two other aspects here. The average size compared to other asset classes is a bit smaller. So we have a hard rule that in our funds, we don't underwrite more than 10 million binary risk per case. We do much larger cases, but if we do larger cases, we'll put those in sidecars. Within our funds, we will have typically 10 million exposure maximum, and on average, that gets us to about seven-eight million investment per case and about 70-80 investments per fund. And that allows us to make sure that through that diversification, statistically, if we maintain our 70%, 75%, 80% success rate, that our returns at the fund level are reasonably predictable.
These are highly active assets, so it's not the easiest asset to scale up. There's also not a Bloomberg page for legal assets. There's a very active. It requires a lot of activities to originate them, underwrite them, and manage them, and that's what our global team does. A little bit on the market size and time. U.S. by far one of the largest markets globally as a legal market. Europe is sizable. Australia is quite sizable and the U.K. Legal assets are one of the few asset classes that have real barriers to entry, and that's mostly because of the way the legal industry works. Markets tend to be very locally organized. You can't use a French lawyer to source or originate or underwrite a case in Germany, and you wouldn't use an IP lawyer to underwrite an antitrust claim or an arbitration matter in any of those markets.
If you want to be active in legal funding and you want to build a diversified book, you will need to build a team that's got those different skill sets available and has the networks to originate the good cases. Given that this is an asset class that requires a high degree of diversification, you need skill, scope, and with that track record to be successful in this industry. The market continues to grow and continues to grow at very attractive rates. Our growth follows the general growth of the legal market, which is above inflation. Regulation has been very supportive for legal finance historically, and there used to be a few markets where it wasn't possible. With the exception of only one market left globally, Ireland, it's completely allowed through regulation now in all other main markets.
Penetration rate of legal finance is still fairly low, and that continues to increase, and that allows for more growth, and there are essentially two ways to invest in legal assets. Either you provide the funding for the actual legal proceedings. That's the classic way of legal finance, but you can actually also, in quite a few cases, acquire or monetize the underlying legal claims, be it non-performing loans, be it IP, judgment monetization. There you actually become the owner of the underlying claim, and the outcome still depends on that legal risk element that we underwrite, which is our key skill and expertise. A bit of a slide on the history of the legal finance industry because we're in quite an interesting period currently. The industry was really in a pioneer stage up to about 2005.
We've been around in that period already, but there were very few parties kind of in a niche situation in local markets, and in 2005, when interest rates went to zero and there was excessive liquidity while everybody was looking to find yields where they couldn't find it in classic assets, that's when there were quite a few parties that entered the legal finance industry and kind of helped develop the awareness for the asset class, then again, in 2015, there was a new boom. Essentially, all the capital that got allocated to private credit, again, looking for yields where classic private credit may not have been always allowing to achieve that, that created an additional inflow into legal assets. Somewhat in a different format, the credit players, they don't typically underwrite or originate single claims.
They will provide what we call law firm loans, which are more kind of credit facilities to law firms which have a portfolio of deals underneath, which is a bit of a different way of structuring the same risk, and they get underwritten at much lower returns. For the last three years, the industry is in a real global consolidation. Not everybody who joined in that, especially in that 2005 to 2015 period, has actually been able to create the skill and scope and track record needed to be successful and more or less have gone in silent runoff because they have not been able to raise new capital, and we now see that the market is developing to just a few players globally that have that skill and ability to offer the required diversification for large investors to be attractive.
That has the interesting situation that the demand for legal finance is increasing, whereas the supply of capital to the industry is reducing. So at the moment, we are finding that we can price up our capital significantly. And whereas we would typically be competing with about three or four other term sheets on our matters, we currently see typically one or no other term sheets on our cases. So currently, the market is in a good spot for the suppliers. Switching then to Omni Bridgeway. As indicated, we're about 40 years old. We are the result of a merger between the Australian listed company, IMF Bentham, and the European private company, Omni Bridgeway. We merged in 2019 to join our networks. Omni Bridgeway was active in Europe, Middle East, a little bit in Asia, and mostly did civil law and legal enforcement.
IMF Bentham was active in Australia, U.S., and Canada and did the other types of asset classes, international arbitration, class actions, group claims, and common law. By combining our two networks, we cover the whole globe and every relevant area of law in our portfolio. Both companies started as balance sheet funders and in that same period diversified or grew by transitioning into a fund management model away from the balance sheet model. This indicates the growth of the company over 2015 to today. We used to be a fairly niche player, and we have grown from 30 to 1,300 investments. We currently have 10 funds, 10 or 11 funds with AUD 5.2 billion under management. That's a fair value. We're active in 15 countries and 165 headcount.
We are very committed to the capital light fund management model, so we'll absolutely continue on that basis, trying to grow our asset base at least 10% AUM. Our historical growth rate has been above 30%. We expect that there is a lot more growth possible, but we've made a public statement that we're aiming long-term average annualized growth of at least 10%. A little bit on our funds. We've raised about 3.2 billion in fund capital, but only seven LPs and large allocators. They've been extremely loyal and reinvesting in every next generation of our funds. The largest one has about $1 billion with us, and there are quite a few others that have taken a whole fund when they wanted to get involved.
Just exactly a year ago, in December last year, we did a large transaction with Ares where we set up a continuation vehicle, and they took the full AUD 320 million of that fund by themselves. We are organized as how we call ourselves. It's a legal multistrat firm. We only do legal assets, but within that broad asset class, we are organized by portfolios. Every legal sub-strategy has its own portfolio manager, its own team that is run relatively independently, and that could be international arbitration. That's one of our global specialties. The head of that team has very deep expertise in international arbitration, and she has a global team that works with her that originated and underwrite those cases. We have a team for intellectual property. That's a global team, legal enforcement.
But we also have teams that focus on a particular geography, like Australia or the U.K. or, for example, Canada. And each of these are relatively small teams that have deep expertise in their particular area of law, and they really understand that market. And our strategy is to grow within legal assets by adding different strategies and portfolios to our platform, which allows us to continue to diversify our total book and will come to our diversification strategy shortly and allows us to scale up where there is a good flow of potential deals at very good risk-adjusted pricing. And if a particular sub-strategy is showing either regulatory headwinds or other difficulties or more competition, we'll be able to scale that down. We'd like to say that we're, and we believe we are, the global leader in this space.
We certainly have a few competitors that are well-known, but they tend to be very focused on one particular market. Chambers and Partners is one of the leading ranking agencies in our industry, and Omni Bridgeway is consistently the party with the most Band 1 rankings globally, so in every possible portfolio that we have on our platform, we tend to be ranked as one of the top three players globally, and this is what we continue to expand. In this strategy, it's all about the team. We are not new to this industry. The company has been around for 40 years, multiple economic cycles. I think the current team, I would call it the third generation in the company. I've been with the company for 23 years.
Most of my colleagues and portfolio managers have been in the industry and with the company for many years and know deeply what legal finance means and how it should be done. That's pretty unique. We are not, and I don't mean it in a negative way, but we're not a bunch of lawyers that have decided to become investment managers. We've been doing this for decades. This is our full history investment performance. So I think this represents about 25 years in investment performance, 799 completed investments. 26% of our deployments have resulted in a loss. So this chart is scaled horizontally by deployment and vertically by realized growth. So the left part, the AR, the deals that resulted in a loss. The other segments are the deals that realized the 2x, 3x, 4x, 5x, and more money multiple on completion.
So this shows, again, that asymmetrical return profile that the asset class can deliver. But it's all about diversification. In this asset class, you need many deals in many different types of geographies and areas of law to make sure that you manage the key risks of duration and probability of loss properly. That's what we're doing. That's our overriding strategy. It's all about diversification. Globally, by region, we are nearly a perfect one-third, one-third, one-third in our split between the Americas, APAC, and EMEA. The middle donut indicates the by area of law, and we'd like to diversify that more. So this is where the portfolio strategy comes into play. But most importantly, mostly to the right-hand side, we don't like too much exposure to a single case. We believe we're really good at legal underwriting.
The reality is that it is still a, there's a big human interface in it, and we think we can underwrite with certainty up to an 80% probability of success, but the remaining 20% always has idiosyncratic risks associated with it, be it a witness breaks down in court, a judge can have a bad day, something else unexpected happens, and so we don't want to have more than a limited amount at risk of a single binary outcome, so the top 10 cases in our book represent about 13% of our total commitments globally. We like to keep it that way, and the team really has the instruction that we are not, we're not out there elephant hunting. We're not about taking the biggest claims that we can find, even though it helps with economies of scale and operational leverage.
We like to invest in middle-sized, straightforward economic disputes, which rational people solve in a rational way at the end. And if matters become too big, there'll be too much emotional or political involvement that tends to cause those cases to be more difficult to solve or to take much longer. A little bit on sustainability, positive impact. This is not the main driver of our business. This is more about a result of what it is that we do. Most of the parties that take our capital are parties that otherwise wouldn't be able to fund it themselves. So in that sense, we are providing access to justice. And many of the cases that we fund have an impact element behind it. We don't look for them, but one of the elements is that a sympathetic claim tends to have a higher probability of settling early and settling successfully.
I think the classic example I would give is that an oligarch-oligarch type dispute, even though one of them will have a very strong legal argument, they tend to be more difficult to solve. That's why we have a lot less of those cases in our portfolio. Our business model, even though we are 100% fund manager and we run the classic asset management model of management fees and transaction fees plus co-investment and carried, given that we are at the very right-hand side of this chart, our returns tend to be in that 30%-35% IRR range. We co-invest 20% in our funds, and we have very attractive carried interest arrangements where we get 20% carry up to 20% IRR, and we get 30% carry above. We get paid on American Waterfall, our deal-by-deal structure.
If you look at our cash flow profile, co-investment returns and carried interest are the main drivers of our long-term profitability. Management fees are important. Transaction fees are important, and we're striving to increase those. It's an expensive asset class to run, but the real attractiveness of this is in that co-investment and carried interest part of the model. To the right-hand side, this shows our historical growth. This is our book, 32% CAGR historically. The light blue part is the as-yet undeployed. So when you do legal funding, you deploy over time during the life of the investment. And that's what's shown here. This is what we expect to increase. The legal market is continuing to increase. Legal finance has still a very low penetration rate.
We see a lot of opportunities for further diversifying and expanding within the legal finance market through different portfolios, be it litigation insurance, be it other types of legal finance. And quite importantly, at the moment, given that consolidation, our market share globally is increasing significantly. And that all helps us to continue growing our book. That concludes our presentation. And happy to take any questions.
Very well. Thank you, Raymond, for the overview. We've time for a couple of questions here. First off, why don't we start off with the portfolio or at the fund level? Maybe you could break down the current mix of active investments by dispute type, geography, and expected return, and maybe talk about where you're seeing the most attractive allocations of capital go towards.
Thanks, Brendan. That's a good question. So we're quite picky.
Out of all of our applications, we accept ultimately about 2.5% of investments. We underwrite at an expected return of at least 2.5x and 35% return on a loss-adjusted basis, so assuming that we will lose about 30% of our investments. We see that the market is continuously moving. Sometimes it's the international arbitration that offers those kinds of opportunities, and the next year it may be the London market that's offering those opportunities. Today, or this year, has been very good for IP in the U.S. It's been very good for group claims in Europe. That's driven by some regulatory changes. It's been very good in Australia. Last year, it were other markets that were doing well. We always see certain markets grow, other markets contract a little bit. That's why we have that model of diversifying by portfolio.
Got it.
And can you discuss the peer group? Who are the key competitors, and how does Omni Bridgeway differentiate itself?
Sure. So we essentially have one large, well-known competitor. That's Burford Capital. They are a legal funder as well, but they run a different model. So Burford is a balance sheet funder. They are predominantly U.S. and U.K.-based, and they tend to do more of the larger credit type structures, and they're slightly more into the elephant hunting type funding. Given that our clients are large allocators, our mandate is to look for very diversified risk. We don't get rewarded for taking outsized risks. We get rewarded for delivering relatively stable returns, taking a quantitative approach to very qualitative asset classes as legal assets. And that's kind of the difference between the different styles. In addition, I think thereafter, probably Fortress is our biggest competitor on the credit side.
They are predominantly focused on doing law firm financing, so they provide loans to law firms, mostly in the U.S., where they provide the capital for law firms to take deals on contingency, and we don't necessarily compete with them head-to-head, and then there are a few more niche players that run private fund models. Parabellum in the U.S. is a known player, but that's about it, I would say.
Got it. That's helpful, and last question. Looks like the stock is trading extremely cheap, right around one-time earnings. What are investors missing here? Why is now a good time to look at Omni Bridgeway stock?
Yeah, that's a fair question that we're trading at a discount. What's happened with the stock historically is that even though we're uncorrelated to the markets, we are not uncorrelated to COVID.
What happened is that when COVID hit, every court globally was essentially, or all court systems were shut down for about two years. When they opened up again, there was a big backlog of cases that needed to be dealt with and that were created in that period. That caused a big delay in the run-up of our portfolio and a delay in the cash delivery of the portfolio. That's what gave some of the Australian investors we had a bit of heartburn. What we see now is that our book is that the backlog has been caught up, and our book is starting to complete. We switched our reporting to, I believe, we're on a very bespoke metric. We switched to fair value.
Shareholders liked it, but they then said, "Well, given that these assets are not that liquid, or at least on paper not very liquid, how do we know you haven't been marking your own homework?" So in order to deal with that, we did that transaction with Ares last year, where we essentially sold a slice of 150 of our assets at a fair value valuation. They went into our book, did extensive due diligence, engaged different channels globally to run it, and then they transacted on the full book and paid at 3.2x MOIC on those investments and very close to the fair value at which we had marked it. So with that transaction, we showed three things. First of all, our fair value is kind of validated. Secondly, there's a secondary market for these assets.
If you don't want to necessarily sit on them till the end, there's a secondary market where you can exit them at a much lower exit yield than you've underwritten them. And somebody who's done deep diligence kind of validated the platform and our underwriting capabilities. And that's been very supportive. And ever since, the market is catching up with the stock. But we're still trading at a discounted book and at a very low earnings per share.
That's great. That's very interesting. Well, we'll conclude there. We really appreciate the overview and the time today.
Thank you, Brendan, and thanks for having us.
Great. Thanks, everybody, for joining us. Have a great day.
Thank you all.