Insolvency expert Manolete Partners reports revenue growth as higher interest rates bite

Revenue at Manolete Partners, the insolvency litigation financing company, is set to jump by 26 per cent in the current financial year as the business has benefited from the rise in insolvencies.

According to a trading update issued ahead of its full-year figures, Manolete said it was on track to deliver a 26 per cent increase in overall revenues for the 2024 financial year to £26.3m, up from £20.8m.

The company’s total revenues for FY24 were underpinned by a high level of realised revenues on completed cases, with realised revenues accounting for 92 per cent of total revenues FY24, whereas unrealised revenues were 8 per cent of the total revenue.

All figures are subject to a full audit.

As at the year-end of 31 March 2024, the company had cash balances of £1.5m, £13.75m drawn down on its HSBC debt facility and therefore a net debt of £12.25m.

There were 311 new case investments in FY24, which is 18 per cent higher than the previous financial year which held the record number of 263.

The company also saw a return of larger cases. The report stated that in the final trading month of FY24, (March), the company completed 28 cases for an aggregate settlement value of £6.6m. Manolete stated that what “is noteworthy is that three out of those 28 cases were larger cases representing, in aggregate, settlements of £6m.”

The financial report noted that “while one cannot extrapolate from a single month’s data, this does highlight the importance of the return of larger cases to Manolete’s portfolio.”

Cheif Steven Cooklin explained that “during FY24, the UK insolvency market showed it was fully rehabilitated from the temporary two-year suppression of insolvencies that the Government had enacted during the Covid-19 pandemic.”

“Significantly higher prevalent interest rates, heightened concerns over geo-political conflicts in Eastern Europe and the Middle East and the withdrawal of the largescale financial supports provided by the Government to UK businesses during the Covid-19 period, has resulted in the highest level of UK insolvencies for 30 years,” he added.

In addition, the executive team at Manolete worked very closely with a team at HSBC to revise and reset the covenant package attached to its revolving credit facility (RCF).

The RCF was originally completed and documented in 2018, providing an initial facility of £10m, when Manolete was still a private company and a very much smaller business. The existing covenants, which had not changed significantly since 2018, were deemed no longer appropriate to the company as a much larger business within a listed entity.

“An agreed amended financing package with HSBC and the robust organic cash generative nature of the Manolete business, provides a strong and efficient financing platform for the business to take advantage of these attractive market conditions,” Cooklin added.