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Pollux seeks family offices to target litigation-finance strategy

Why is this important: Family offices are joining to improve access to a potentially lucrative asset class: litigation financing.

Pollux Investment Management is the latest project from longtime investor and former hedge-fund director Marc Abrams, where he hopes to use the family office space to target an asset class in which he sees strong potential: litigation funding.

Abrams, who until 2009 was co-founder and senior vice president of Titan Capital Group, hopes to formally launch Pollux by September. He targets $200 million with a first close in Q4 and total initial capacity of about $400 million.

“It’s the practice where you have essentially a funder providing capital to lawyers for them to prosecute cases on contingency,” Abrams told Buyouts.

“Lawsuits come and go in good markets and bad markets. So in terms of the sector itself that it’s based on, it’s completely non-correlated to other financial assets,” he says. “In terms of a diversifier for your portfolio, I think it’s a really exceptional-looking cash flow.”

Abrams calls Pollux a “multimanager fund focused on litigation funding.”

“The space itself needs more data; it needs to be understood from a financial-analytics point of view,” Abrams said. To that end, Pollux will offer a database of litigation funders where portfolio allocators can research and invest in the sector.

“I feel there’s tremendous yield in the litigation-finance space; however, accessing it in a risk-adjusted manner for more institutional portfolio-construction-focused allocators has a lot of challenges right now,” he said. “The idea of Pollux is to solve those challenges.”

Family offices will be a key driver in the growth of litigation finance, and of Pollux, at least in the short term, Abrams said.

“[The] growth in it is being driven and will be driven initially through family offices, and then from that growth … you will see institutional money start getting more and more involved in it,” Abrams said.

Abrams values the FO space, including conferences and professional organizations, for the opportunities it provides to speak with other investors.

“It’s refreshing,” he said. “Having some good, strong intellectual conversations with peers about pros and cons without agendas … it’s quite helpful regardless of whether you agree or disagree ultimately.”

Abrams credits these conversations with his decision to avoid blockchain investments but also with encouraging him to embrace medical cannabis manufacturing.

After Titan Capital, Abrams started Clearwater Ventures, a consulting and advisory firm. He also invested in Aracar Group, an asset-backed lending platform in Argentina.

Action item: Reach out to Marc Abrams at mabrams@polluxmgmt.com. And Check out Pollux’s website here.