Aristata Capital has secured nearly £52 million ($67 million; €70 million) of capital for the final close of the first impact litigation fund.
The Aristata Impact Litigation Fund I LP works by providing financing for claimant groups that cannot afford litigation, in return for a multiple of its investment or a percentage of the settlement should the litigation succeed.
The final close of the fund, which is anchored by Capricorn Investment Group’s Sustainable Investors Fund and The Soros Economic Development Fund, has surpassed its £50 million minimum target.
LPs include foundations, impact fund-of-funds, family offices in the US, UK, Europe, and Australia and a number of high-net-worth individuals, Aristata said.
Rob Ryan, Aristata’s founder and CEO, has previously explained the fund was launched tackle a justice gap in commercial litigation.
At the time of first close, the fund had already invested in two cases, including one by an Indigenous group in the South Pacific looking to “assert its rights against a monopolistic service provider that isn’t abiding by the terms of the contract”.
A spokesperson told Responsible Investor that since then, a further two have been funded, of which one – involving human rights abuses – has resolved successfully. Two more, involving environmental pollution and medical negligence, are being put forward for “approval imminently”.
Aristata Capital also has a “very healthy pipeline” of additional opportunities whose impacts affect both global north and global south jurisdictions, the spokesperson said.
“The claims we are seeing and supporting demonstrate the need for funders focused on driving positive social and environmental impact,” Ryan said.
Ryan told RI the firm is aiming to launch successor funds, adding that “what we have seen is a growing demand for innovative impact investment products that deliver measurable impact without sacrificing returns”.
As previously reported, when asked whether seeking investor profit from litigation by marginalised and Indigenous groups was exploitative, Ryan said the fund had a hard minimum of 50 percent going towards the claimants, whereas traditional litigation funds generally look to take as much as a judge will allow. The fund’s aim will be to return “the majority” to the claimant groups, which Ryan said would otherwise be unable to proceed with their claims.
Investors and NGOs are increasingly using litigation against governments and companies to force change on ESG issues. In October, six investors, including Swedish government pension fund AP7 and the Church of England Pensions Board (CEPB), started legal action against Volkswagen after the company once again refused to table their climate lobbying proposal, arguing that the topic was beyond the competence of shareholders.
However, last month a regional court dismissed the case brought and denied the investors the right to appeal its decision that their proposal was not permissible.