Good afternoon, everyone. I would like to welcome you all to the Burford Capital 2022 business update. My name is Brika, and I'll be your event specialist running today's call. After the speaker's remarks today, there will be a question- and- answer session. To ask a question, please press star, then one on your telephone keypad. If you change your mind and would like to withdraw your question, please press star two. For operator assistance at any point, it's star zero. Otherwise, you can use the webcast. Thank you. I would now like to hand the call over to our host for today, CEO Christopher Bogart. Christopher, you may begin.
Thank you very much. I know that there are a number of questions out there, about process and so on, and we are absolutely gonna get to those questions. However, we did say that the substance of these two calls before Q&A would be identical. I know that there are people as a result who are not joining this call until after, the substance is over because they were on the call last night. What we are going to do, notwithstanding those questions, is we're gonna play the recorded version of the business update. Then after that, I'll come back, address some of the questions that I know are out there, and then proceed to take all of your Q&A. With that, let's please go ahead with the body of the call. Thanks.
Hello, everybody, and thank you very much for joining us for our business update call on our 2022 activities. As usual, I'm here with Jon Molot, Burford's Chief Investment Officer, and Jordan Licht, Burford's Chief Financial Officer, and both of them are gonna talk to you separately. I'm going to lead off and spend a little bit of time starting on slide four after you get through the disclaimers. With that slide up, I'm really excited to be talking to you about two quite different things today. First of all, on the business itself, we are really feeling that the pandemic is moving into the rear view mirror for litigation and for courts. We had a really nicely strong 2022.
$350 million of cash realizations, up 33%. Record-breaking new business. $1.2 billion of new group-wide commitments. Balance sheet deployments that have more than doubled over the last two years. We had a real growth in the modeled value of our balance sheet portfolio. That grew by $800 million last year at 21% growth rate. We raised more than $1 billion of new capital during the course of 2022, and we ended the year with a strong cash and liquidity position that Jordan will talk more about. What we're really excited about, notwithstanding the fact that 2022 was a really nice, good catch-up year and a strong year for us, we're really excited about 2023. The courts are back fully in operation.
We are seeing that reflected now in some numbers. For example, we've got more than 30 final merits hearings or trials already scheduled during the course of 2023, and that compares to only 10 such hearings occurring in 2021 and only 11 last year. That's a really strong beginning to the year, and it makes us optimistic that we're gonna get back into the groove that existed before the pandemic. 2023 has also begun very well. We've had several case successes already and a $90 million settlement, a $67 million trial win, a $52 million arbitration award for one of our managed funds. The world has just come back to life. Courts are back doing their thing.
On top of all that, while this is not a source of great happiness for us or for you in other quarters, the world economy is obviously not in its most robust state, and that leads to opportunity for us. The simple reality is that, you know, when things are going wrong for businesses, when interest rates are rising, when there's corporate stress out there, that leads to disputes. Those disputes lead to opportunity for us. We're pretty optimistic about where things stand on the back of what was already a strong 2022. Second of all, we're excited about what's going on with our fair value accounting. That's a both a wonky and a somewhat eccentric sentiment, as I'm sure that many investors read our release and instead reacted to words like SEC and delay.
We have been living the quixotic nature of fair value for the last 14 years in this asset class, and we've been doing that without having a North Star. That's led to us spending more time talking about accounting and less time talking about the merits of our business than we would have liked. Now, we do see a North Star, and that's thanks to some significant engagement by the senior staff of the SEC. We have high hopes of a clear, fair value approach that should become the industry standard and will let us never again have to talk about accounting standards on earnings calls. We've been engaged constructively with the SEC for around six months now, and we feel good about where we are, which will result in some methodological change, but will still anchor our asset values to case events.
At bottom, what's really going on here is fundamentally an inversion. Instead of starting at cost or present value and adding value as we progress through case events, which is what we do today. We're talking about starting with a future value and discounting it back, but again, with meaningful changes in value only driven by case events. The beginning and the end points of that spectrum remain the same under either approach. Of course, it would have been too much to ask to have this happen last spring in good time for a relaxed year-end. Instead, we have it happening in real time, and that means we will be providing our audited statements later than usual, although we hope to have them out in 45-60 days.
As you know, we manage the business on a cash basis, not an accounting one, and we can't spend fair value. All the numbers we're providing to you today are cash numbers. This delay doesn't have any impact on us as we run the business, and we think you should regard it as a long-term positive for the business just as we do. I can't really emphasize that enough, but I am delighted with the idea of moving to clarity on this question and really putting it behind us as one of the growing pains associated with this business and this industry. As I said, you know, we continue to run the business on a cash basis and none of this accounting dynamic has any effect at all on us as a cash basis.
After we go through this presentation, we're happy to answer your questions about all of this within obviously the limitations of what we can say while we're in an ongoing process. Turning to slide five, we thought it was useful to set out crisply the four things you get when you buy Burford stock, what we're basically calling the four pillars of value. To begin with, we have what is now an enormous core portfolio of litigation assets. You know, we model those assets as we've described before and as Jon and Jordan will discuss in more detail. That portfolio, excluding our YPF assets, right now shows an expected value of $4.6 billion at year-end.
We've been consistently producing high returns across the capital that we have deployed into that portfolio with now a cash track record that's well in excess of $2 billion. Pillar number one is you're getting an existing book of desirable investments. Pillar number two is you're getting an origination platform. We're the industry's market leader. We have significant scale, and we've demonstrated over and over again our ability to put a lot of new business through that origination platform, more than $1 billion in each of the last two years. We do that with a global presence. We do that, again, with our clear industry leadership, with our relationships, with our brand, and with our share of voice in the industry.
The third thing you get is the industry's leading asset manager with, we've raised almost $4 billion in investment funds over time. Those funds not only augment our balance sheet capital, but they enable us to provide other opportunities to investors, that let us really cover the waterfront, cover the gamut of what, of what our clients need, and provide investors with a wide range of risk and return opportunities. Finally, we have what really you could almost argue is a free option on the YPF-related assets.
We've already made a significant amount of cash profit from the YPF cases, and we're waiting for an outcome of them, which of course, if it is positive and in our favor, could be of substantial value. Really, Burford gets you those four things all together in one package. There's nowhere else you can get those things, either in the scale or quality that we provide, and we're really excited to be able to show you what we can do with them going forward. With that, I'll turn it over to Jordan.
Thank you, Chris. Great to join the team and be with you here today. I'm turning to slide six. This slide shows our cumulative returns since inception. Most of you have seen this slide before. It's great to reiterate the story. Burford has consistently earned high returns that are uncorrelated to the economy or market fluctuations. We have a 14-year track record of very strong returns with $2.2 billion in cash realizations, an 88% cumulative ROIC and a 29% IRR. In my first few months, I saw the power of the business represent itself in short order. The global antitrust portfolio matter that we've discussed previously had a significant partial realization with an impressive 42% IRR. The ROIC was 48%, which is what we would anticipate when litigation resolves fast.
It's exciting to see the power of the business producing significant cash on cash returns. Moving to slide seven, another slide that you've seen before. This demonstrates the favorable returns of the asset class. We outline our track record in a different way here. There are a couple of key takeaways to point out. We win much more often than we lose. There's positive asymmetry on the size of our returns that skews toward the cases we win. Finally, it shows the repeatable nature of earning high returns. We have now had 30 matters conclude with ROICs greater than 200%, including four in 2022. I know not every case wins, but when we experience a loss, it's not necessarily a total loss of capital. I wanna point out the bullet on the side of the page that illustrates this nicely.
On the 16% of losses, we still recouped 42% of the deployed cost. Let's flip to slide eight. We've updated the output of our proprietary probabilistic model for year-end 2022. Quick note, this page is based on the Burford-only capital provision-direct portfolio, excluding the YPF-related assets. Let's start on the column furthest to the right. You can see the implied realizations from the model and the implied performance fee income both increased in 2022. Implied realizations at year-end were $4.6 billion, up from $3.8 billion previously. The implied performance fee income, which includes income from BOF-C, is $500 million, up from $400 million. The implied ROIC has remained relatively steady at around 140%.
As we've said before, this return figure is greater than our historical level, mainly driven by our putting on larger cases, including monetizations and claims families, which we believe tend to have higher returns. It's important to make sure that we understand the impact of these numbers changing over time. As we continue to refine and improve our model, we could see these numbers move around. Also, while it's great to see the anticipated gains of the portfolio rising, there are times when it will decrease. For example, as assets in the portfolio convert to realizations, which would be a positive for the company, it would be removed from the modeled portfolio. Moving forward to the next slide, we have a fantastic origination platform, great brand, and a great track record.
History of innovation, regular interactions with almost the entire top 100 U.S. law firms, and a global presence that meets our clients' needs all over the world. A team that is steeped in commercial litigation that combines financial and structuring acumen with a database of 14 years of results. All this manifests itself in putting capital work. In 2022, we added record levels of new commitments and deployments, and more of those potentially higher returning assets are going to our balance sheet, as we've increased the portion of our originated core legal finance assets that are allocated to the balance sheet. We also believe that we deployed capital into high-value assets in 2022, as we've added $900 million in modeled realized gains this year from new business.
This figure represents both deployments from commitments made in 2022, including deployments already made in the year, and commitments from prior year vintages that converted from discretionary to definitive commitments. As Chris mentioned, we look forward, and we're excited not only about the potential for realizations as court backlogs ease, but also the opportunity to continue to originate new, high quality, high returning core litigation finance assets. With that, I'll turn it over to Jon to talk about the portfolio.
Thanks, Jordan, and thanks to you all for joining. It's great to speak with you. I think we were able to recruit Jordan, who is a fabulous CFO, because we have this amazing portfolio with a very attractive, interesting, profile. I just wanna talk a little bit more about the portfolio and where it's, where it's poised at this moment. As Chris said at the beginning, the portfolio is poised to deliver more results than it historically has. You just look at the bullets on the left that Chris alluded to earlier that, like, we've got more than 30 trials and final merits hearings already scheduled for this year, as compared to 11 for last year and 10 the year before.
It's just so much more activity than we had seen, and it's just a big uptick, and the COVID delays really do appear to be behind us, and the logjam is breaking. Just in the first two months of this year, we had a trial verdict that, if affirmed, would deliver $67 billion to Burford. We had a settlement that did deliver $90 million in cash to Burford, and we had an arbitration win that would deliver $52 million to one of our private funds. 2022 was more active than 2021, right? We did see a 20% increase in resolution, 60 versus 50, but there's much more poised to happen still in 2023 than there was in 2022.
If you turn to slide 11, you can see graphically, there's a lot of information on this slide, but you can see sort of what we've done so far and what we are poised for in the future. The bottom horizontal line, the black with the white figures, that basically shows our IRR per vintage and shows positive returns across vintages that are quite attractive. You can see another representation of that positive performance by comparing the black vertical bars above to the red vertical bars above. The black ones are the money that went out the door in deployments, and the red are the realization. That's the money that came back, and we're very pleased that the red bars are larger than the black bars.
What I'm really interested in is the gray shaded vertical bars, because that's the money we've put out the door in matters that haven't yet concluded, and that's what is poised to deliver in 2023 and beyond and what I'm very optimistic about. I joke with the team that we're a bit like air traffic controllers with lots of planes in the air, all of which are poised to come in for a landing, and it's just a wonderful thing to see so much activity in the portfolio.
If you turn to slide 12, I'll say, just to spend a moment on YPF. There's really not that much to say. It's the motions for summary judgment have been fully briefed since June of last year, and we're just waiting. That's not uncommon in litigation, that a judge will take some time to write a definitive merits opinion, and we'll see what comes of it. There's not really much more we can say other than that it's there and fully briefed and ready. With that, I'll turn it back to Jordan on slide 13 to talk about this great origination machine, where we get the capital from. We have different pools of capital for different risk-reward profile deals. Jordan?
Thanks, Jon. We talked about putting money to work on the balance sheet, we also, as Jon just mentioned, have a great asset management business. On page 13, I wanna take a minute to talk about the value we see in that platform. We think about the asset management business as benefiting us in two ways. Number one, we view it as giving us the ability to engage in a broader range of legal finance activity. Number two, it provides leverage to the balance sheet, enabling the balance sheet to be more diversified and for us to be able to execute on larger transactions. In 2022, we closed on the $360 million Burford Advantage Fund, our first fund that invests in lower risk legal finance assets.
On BASE II, our latest post-settlement fund, as the investment period for BASE I ended during 2022. We believe we're the largest asset manager in the legal finance space by a considerable margin. We saw meaningful growth in our asset management income to $36 million for 2022, primarily driven by the growth in income from BOF-C as that portfolio of core litigation finance assets seasoned. Speaking of BOF-C, during 2022, we extended the investment period of that fund to the end of 2023, and we shifted the allocation of each new matter that meets the relevant investment criteria between the balance sheet and BOF-C. 75% of those assets now go to the balance sheet, up from the previous 50%.
While the timing of earning our asset management income can be variable due to the structure of our arrangements, we're very excited about the potential earnings from this platform. Keep in mind, on the slide that I had shown earlier, that the $500 million in implied performance fees from our probabilistic model don't also include the income from Advantage Fund or post-settlement funds. Let's move on to slide 14. Our liquidity position consisting of cash and cash equivalents and marketable securities at year-end was $210 million. You know, cash receipts of $328 million in 2022 was up 17% from 2021, reflecting the pickup in realizations, and we expect to see meaningful cash inflows to occur as case resolutions continue to accelerate.
As we always, we balance maintaining our liquidity cushion due to the variability of our cash inflows with seeking to minimize the drag of low returning cash on our overall return on tangible equity. I'd also highlight that we have $115 million at year-end of receivables, the majority of which we expect to convert to cash in 2023. We begin 2023 well positioned to continue to deploy capital against new opportunities. As Chris mentioned, we've had some significant early wins in the first quarter that, if paid in full, would meaningfully contribute to our current liquidity position. With that, I'll turn it back to Chris for some concluding remarks.
Thanks very much, Jordan and Jon. Just turning to slide 15 and wrapping this up before we take your questions. Again, we sort of begin where we end where we began. We're very pleased with what happened in 2022. The world came back to life. We saw, you know, meaningful upticks in virtually every metric across the business, ranging from realizations in the door to the new business out the door. We ended the year with a very strong cash and liquidity position, which is only continuing to be augmented during 2023 as matters continue to come to fruition. We've got a lot of optimism about what's happening in 2023.
Just the sheer fact that after, you know, being closed and delayed during the pandemic, courts took a while to shake that off, but they have shaken it off now. Every court that we're aware of is operating at full capacity and is doing its best to work its way through its backlogs. We're seeing the benefit of that, both tangibly in the examples that we've already given you about good things that have happened during the, during the early part of the year and just in terms of what the court calendar looks like as the rest of the year goes forward. We're pretty, we're pretty pleased about where the business is after having to endure, you know, a little bit of sleepy time during the pandemic.
As I said at the outset, while inconvenienced and slightly aggravating, on a process basis, you know, I'm pretty excited about the ability not to talk to you any longer going forward about fair value accounting, and to have, you know, to have a pretty clear standard for us and for the industry going forward. With that, we'll stop talking at you, and we'd be delighted to take your questions. As, as promised, I'm gonna come back on now. Before we open the floor to Q&A, I'm gonna talk a little bit more about the SEC process and what's going on here in response to a number of questions that we've received, and I'm gonna sort of roll all those questions into one comprehensive answer.
By way of background, Burford, when it moved to the U.S. and listed on the New York Stock Exchange, in 2020, we did that still reporting under IFRS. Our listing process with the SEC and the first year of financial statements filed as also a U.S. issuer were issued under IFRS. While the SEC obviously reviewed those statements as part of the listing process, the SEC's role with respect to IFRS and U.S. GAAP is different. When it comes to U.S. GAAP, the SEC is the final word for what U.S. GAAP is for public companies. Then you get to 2021. What happened in 2021 is that we changed to U.S. GAAP, and 2021 was the first year we were reporting under U.S. GAAP.
The other thing that happened in 2021 is that we started publicly providing the outputs of our probabilistic modeling. We had been doing that modeling for some time beforehand, but at our investor day in 2021, we unveiled that work for the first time. As you know, we have been reporting on changes and updates to the model values ever since. There's some relevance to that development as well here. In the normal course, you know, with 2021 being the first year that we were filing in U.S. GAAP, the SEC staff would, as a matter of course, review that 2021 filing during the course of 2022 and provide any comments. This is a routine process that happens with the SEC.
Those comments ultimately become public, and you will be able to see them. They, you know, the SEC asks a number of questions. You give them answers. It's a very customary process. That unfolded, and during the course of that process, we started talking more broadly to the SEC about fair value accounting for this asset class under U.S. GAAP. The reason for the interest was obviously because this is the first time the SEC has had to confront litigation finance assets. There isn't any other listed litigation finance firm out there. At the same time, I think if you look around the market, you know, it's clear that this is a growing asset class and that it's acquiring some degree of public significance.
People know that it exists, and it's getting press and capital flows and so on. We're obviously the market leader. I think quite as I said in the prior remarks, you know, we've had a very constructive set of engagement with the SEC staff about the best way to account for legal finance assets under U.S. GAAP. Just for context, you know, historically, we've had this valuation approach where we start at cost, and then we use case events to mark cases up and down. That, we believe, has been satisfactory, but it also has led to, you know, quite a lot of the value of those assets only being recognized upon resolution. We've published this data for some years, and, you know, we're sort of somewhere in the 25% range.
In other words, by the time we get to a successful resolution of a litigation matter, we generally speaking have only recognized about 25% of the ultimate profit, even though there may well have been case events along the way that, you know, showed that the case was proceeding in the right direction. When you marry that up to the probabilistic modeling, the probabilistic modeling gives us the ability to do something that I would describe as more traditional in the asset valuation sense. We have now an expected future outcome. We have an expected duration. You know, the question I think becomes, if you have information like that, isn't it appropriate to be and especially if you've been finding that information to be fairly reliable, isn't it appropriate to be using some of that information as part of the valuation process?
That's what we meant when we talked about inverting the process. There is no question that we believe, and we believe the SEC accepts, that case events remain the prime driver of value of litigation assets. When we put a case on, its value doesn't go up at our level of historical returns simply because of the passage of time. People will not pay dramatically more for a litigation asset a year after its inception simply because time has passed. They will want a buyer of an asset in the market will wanna know what the court thinks, what the arbitration tribunal thinks. Is there evidence that things are going well? Under any methodology, those will remain, in our view, the prime driver of market value of our assets.
There are some methodological things that we can do to come closer to traditional principles of fair value. Obviously, if this was an operating business, we're valuing an operating business, you take a bunch of cash flows, you know, you discount them back at a risk-adjusted rate, and that, presto, gives you your present value. We're not talking about doing quite that, but we're talking about moving in the direction of having a time value of money concept and calibrating our models to purchase price. As I said before, inverting the process. We are in the process of implementing that approach. As we said in the release, that approach will be audited and vetted with the SEC.
We have had enough discussions that we have a, you know, a level of comfort about where we are in the process and how much longer it's going to take, which is why we were able to give, you know, a reasonably precise range of when we think this will all be done. What we've said is our expectation is in the 45-60 day range. Candidly, some people have asked why we just came forward with this information now. There was a point where we were hoping to be all done in time for a March release, and it simply ultimately proved not to be the case, that we needed some more time than that. This is not something that we believe has months and months of time to go.
That's, by the way, why we think there is no, you know, what I would call a vanishingly small risk to, you know, a default on the debt or anything like that. Those risk factors are in the release for standard U.S. disclosure reasons. The simple reality is we have until June 30th before anything happens on the bonds, and we have longer than that for any other deadline. We just don't think those are in issue at all. We are comfortable with where we are in the process. We think it's a constructive process. We think the end result will be positive for the business. We look forward, as I said before, to not ever having to talk to you again about the ins and outs of fair value accounting.
With that, there's a question that's sort of related that maybe Jordan should pick up, which is, from Jeremy Hewitt, who says, "Logically, if fair value carrying values move from a cost base adjusted for legal judgment or significant legal events to a discounted present value of expected outcomes, wouldn't the implication be that carrying values could be expected to rise?" Jordan?
Sure. I think, Chris, you actually touched upon that ever so slightly, when you discussed the fact that, we still believe that the overwhelming value release associated with a litigation finance asset is associated with the observation of adjudicated events. You know, I think one shouldn't look at this purely as just a straight line, as Chris, as you mentioned, of an accretion of an IRR. While we will bring in some, you know, elements of, you know, cost of capital and so forth, we do expect the values to still, you know, move significantly with observable events as opposed to just moving over time, as you had mentioned, Chris.
Thanks, Jordan. With that, I know that people may have more specific questions, which we're happy to do our best to answer. Hopefully, people will also have some questions about [audio distortion], because my goodness, we're pretty happy with where we are. By the way, I should point out that we actually omitted in the oral presentation to mention our most recent success, which we do have in the release, which is an appellate resolution. In other words, not even a trial win. We've now won on appeal as well. It's very rare for those to be further disturbed. An appellate resolution that would deliver $400 million approximately in proceeds group wide, including to some of our managed funds, and about $100 million to the balance sheet. It has been a pretty terrific beginning 2.5 months to the year. With that, why don't we take your questions?
Thank you. If you would like to ask a question, please press star and one on your telephone keypad. We have the first question on the phone line from Alex [Bartrop] of State System Pension Fund.
Hi, guys. It's Alex from BAE. Thanks for taking the time and for hosting the separate call in London time as well. Two questions from me, please. Firstly, can you just clarify this, the change to the fair value accounting? I can completely understand the rationale, and I think I understand the reasoning behind it. On day one, assuming this change gets through, presumably the value in the accounts would be the same under both treatments because you're, you know, it's cash deployed t= 0. What we're saying is actually at the first point that the, you know, the judge makes a decision or something similar, at that point, we would deviate from where we are today. In the new world, we would then start realizing more P&L at that point. Is that the right understanding?
You're certainly right about day zero. You know, these are arm's length negotiated commercial transactions with counterparties. The amount that we are paying out, you know, either, you know, in cash when we do a monetization or over time, the amount that we're agreeing to pay out when we do a case funding, that is the value at the time of doing the transaction. That's absolutely right under either approach. You're also right that the potential for modification is, you know. Let's say, you know, let's say we put out $100, and we expect to get $300 in, you know, three years later.
You know, that implies if you, if you calibrate that to a $100 cost, that implies a certain discount rate. That discount rate is far too high, in our view, to simply be applied to the cash flows. You know, because. The reason why I say it's far too high is because, you know, our returns are pretty high, and therefore you would be accreting quite a lot of value just by the passage of time.
As I said earlier, we don't think that a buyer of assets, of these assets would pay that level of accretion simply because of passage of time. There may be a world where we have a little bit of accretion, at some much, much, much lower rate while saving the bulk of valuation change for case events. That's sort of the direction of travel, if you will. Jordan, feel free to expand on that, if you'd like.
No, I think you hit the high points there.
Okay.
Okay. Thank you.
Um.
That makes sense.
Sure.
One more-
Another question?
If, if-
Sorry, go ahead. Yeah, go ahead, please.
I was just gonna say, as a completely different question. In the higher interest rates world that we're now living with, just thinking about your capital structure, are you happy with leverage of where you are? You know, would you be willing to take it higher or lower? And any comment on rating and whether we're happy where we are today?
Yeah, the business is not levered at any material level today. You know, we're sitting on sort of a quarter turn of leverage right now. You know, we've always said we don't see this business as being a highly levered strategy just because of the, you know, the inherent risk of the underlying assets and the unpredictability of the cash flows. At the same time, you know, we've been opportunistic users of the credit markets, and I think we're certainly prepared to continue to be, to the extent that we see opportunities that go beyond our ability to self-fund them. You know, that being said, you know, the business does throw off quite a lot of cash, and as the courts reopen, we expect the velocity of that cash to increase.
We feel very happy with our liquidity position. You know, when, you know, when you have results like the ones that I just chimed off in the space of, you know, 75 days, you know, that can contribute on its own quite a lot of liquidity for the business. I think we're, you know, the short answer is we're opportunistic and open to, open to it as part of the capital structure. We don't necessarily see it as a, as an imperative.
Understood. Thanks so much.
I might-
So another-
I might just add to Chris's point, sorry, about the, you know, first couple months of the year. You know, I know from my job is usually incredibly busy in the last half of the year, both with new deals, but also because there's more activity. People try to get cases settled coming into year-end. They try to pack in trials before year-end, historically. I'd say this first quarter has been by far the busiest I've ever had. The number of things going on. Sure, at the end of last year, there were those December 30th, 31st settlements that were being worked out at the very end. The amount of stuff that's gone on in the portfolio, the activity in the courts and the activity among parties discussing settlements has been markedly higher than in any year before, I think.
Thanks, Jon. Another question, this is from James Lu [at Zegg], on the webcast. Is the probabilistic valuation model something the SEC asked for or something you pushed with the SEC? Who was driving it? Can you draw a comparison against other asset managers that marked a model like private equity? The two things are separate in the following sense. You know, we've always used financial modeling, of course, inside the business to assist with our investment decision-making. As we outlined at the Investor Day, starting in about 2017, we started putting real resources behind that effort. We now employ a number of data scientists and people who do hardcore probabilistic modeling with us. Our models have, you know, grown exponentially in sophistication and their significance within the business.
Part of that is because at the same time, our proprietary data set has continued to grow by leaps and bounds. One of the challenges with modeling litigation is that most litigation outcomes are confidential. You get to see the things that go to trial and win and lose, but those are the shoulder cases. The bulk of litigation resolves through confidential settlement. So we have really sort of an unparalleled set of confidential proprietary data that we can put to use in our probabilistic modeling as well. So we, as you'll recall, we gave a meaningful presentation at our Investor Day about how we do it, about the back testing reliability of it and so on. So it existed for a business purpose, having nothing to do with accounting.
We didn't create it for an accounting purpose. It has been part of our business for quite some time. What has changed as of 2021 is that we began showing you the outputs of that modeling as well. We instead of just using it internally, we started to make it public as well. That, not surprisingly, attracted the question of, well, gee, you know, if you were a private equity fund, you would create fair value by doing just that kind of modeling as the question suggests. You know, if I'm Blackstone, I mark all my assets to a fair value mark. I do that by running a series of cash flow analyses and projected, you know, exit multiples and durations, and that gives me a valuation today.
That's the value that I carry assets, you know, on my books at. I think the presence of sophisticated and fairly accurate probabilistic modeling certainly was a factor in leading us down the road to some modifications to the fair value model. That's I think the best way to describe it. Another question on the website is from Mike Bancroft at Leste. In response to a previous question about cash realizations being below commitments, you indicated the opposite, that 2023 should deliver significant wins. Against this backdrop, would you consider buying back stock? We get asked this question from time to time, and the board certainly regularly considers the question as well because investors obviously raise it. The, you know, the dynamics, of course, are twofold.
You know, one is just how much cash capital we have available and the extent to which, you know, we want to use some of that capital for a purpose other than continuing to grow the business and investing in litigation assets. You know, because we're a serial compounder of those returns, you know, when we put $1 of cash to work in a litigation asset, that $1 of capital comes back fairly rapidly with a high return, and it turns around and goes back out the door again. The analysis that you'd have to do is not a static 1 turn of cash analysis. You'd really have to do the broader analysis of what the sort of total future value of that, of that foregone $1 of litigation finance is.
When we have done that, when we consider the availability of capital and, you know, the prior question on debt, suggested that, you know, we would, you know, continue to probably need or at least want more capital than we generate to continue to grow the business. You know, there's a question about whether we should be diverting to buying back stock. The other part of the question, of course, is around liquidity. You know, we don't have the world's, you know, deepest and most liquid trading market for the stock as it is. There's, I think, always a question in the board's mind about, you know, whether it's beneficial for shareholders to reduce the liquidity. It's something that we keep under regular review. Now I think there's a question on the phone.
Thank you. You now have.
David-
David Neil. Oops. [David Neil with Miller Board].
Hello. Hi. Afternoon.
Hello.
I got three, but they're rapid fire ones, hopefully. Could you just clarify, has the SEC agreed the proposed methodology, and it's now just a question of executing and getting it done?
No. That happens at the end of the process. As I said, we've had, you know, we've had meaningful discussions with the SEC that gives us, you know, quite a significant amount of information about where the SEC is.
Okay. Brilliant. That makes sense. Thank you. Is there any indication that the SEC might want you to hold assets below cost?
No, not unless they are impaired for some reason. You know, again, we come back to the question of case events being the primary driver of value under sort of any valuation approach. If we have a case that's running along and we suffer a significant litigation setback, it's entirely possible that we would mark that case below cost, but it would be in response to an event.
Yeah. That makes total sense. Last one. I mean, the conversation so far about them, the fair value accounting is all makes lots of sense. What about assets where the valuations sort of driven by transaction values? Whether it's been sort of a sale of part of an asset, how are they going to be treated?
Absolutely. We have always, well, I say always because those are rare, but we have always had a clear preference for market transactions when they are available. That's a pretty clear doctrine of fair value accounting. You know, the theory behind fair value accounting, if you buy this stuff, is that you're supposed to be using, you know, an accounting, you know, principle to try to mimic what a third-party buyer would actually pay for an asset. If you actually have a transaction with a third-party buyer, that's the best evidence. When we've had that occur, we have certainly used the third party mark.
The reality, though, of litigation finance is that because you, generally speaking, need access to privileged information, to be able to properly assess assets, it's very difficult to. There's not a very active secondary market. We don't have very many secondary market trades.
I mean, I guess just to clarify, does this mean that you might... If it's been a long period since a prior transaction, you might step back from a, what was previously marked against a open transaction, you'd revert to mark more to sort of valuation model?
I think it's hypothetical because we haven't had the experience, so I don't know the answer to that. You know, we've As I said, we've only done, you know, two or three secondary transactions during our life, the largest of which is in the YPF matter. In YPF, you know, it's not only that we had the transaction itself, we, you know, we have not had a significant litigation event since the transaction that would sort of intercede, if you will. I think, you know, I think we'd just have to deal with it on a case-by-case basis.
Great. Thank you very much.
Thanks. Now we've got another website, question. This one we'll give to Jordan. This is from Andrew Shepherd-Barron at Peel Hunt. Please, can you tell us how much the four post-year-end items mentioned would be on a Burford only basis?
Sure. Andrew, thanks for the question. Probably having a chance to get through all of the materials. If you look at page 19, though, in the business review, we do provide a reconciliation of that, but I still will answer the question. Which is, you know, if these all were, if all the cash proceeds came up in the upheld, it would be $168 million. That's with respect to 3 of them. 1 of them, which we mentioned, is with respect to 1 of our private funds.
Of course, there was the cash that actually came in. Right?
Yes.
Right.
Meaning the first case, the groupwide $90 million.
Yeah. Yeah. and a follow-up from Andrew: Don't you hold almost all of your assets at the lower cost or realizable value, with the exception of Petersen? Surely any mark to market should really only give book value upside, perhaps apart from Petersen. To the extent that I understand the question, we don't hold them at the lower... No, I think is the answer. We, we fair value them. Fair value by definition is not the lower of cost or realizable value. Fair value is whatever fair value is at that point. Now, what I said earlier, I think is significant though, which is that, our fair value has historically been very significantly below what ultimately the cases produced for profitable resolution. Fair value accounting doesn't have the concept of the lower of cost or value.
With that, we are close to the hour, I think that we have exhausted people on these topics. Thank you very much, especially to those brave souls who did two calls with us in the course of 24 hours. I hope that we have managed to set out clearly what's going on. You know, as I said, obviously we would have preferred a world in which this had happened three months earlier, and not disrupted the timing and flow of our year-end reporting. As I hope you've taken away from this call, we feel good about where we are. We are not concerned that this uncertainty is going to linger on. We're not concerned about its impact more broadly in the business.
The flip side of all of that is, you know, we think the accounting stuff is a net, is a net long-term positive, and we think the business has finally turned the corner coming out of the pandemic, and we're super excited to see what 2023 brings in total. Thank you all for your support, and we're always happy to talk to you individually as well if you have further questions about anything else. Thanks, everyone.