Saudi support for Burford as Muddy Waters lays siege

ONE of Saudi Arabia’s richest families has become a major shareholder in Burford Capital, the litigation funder under attack from American short seller Muddy Waters.

City sources said the Al Rajhi family is backing Mithaq Capital, which late last year bought a 5.1 per cent shareholding in Burford Capital, one of the largest firms on London’s junior stock market AIM.

It has seen its share price decimated after Muddy Waters – the hedge fund run by Carson Block – questioned the company’s corporate governance and accounts in a scathing note last year.

Public documents show Faisal Al Rajhi sits on the board of Riyadhbased Mithaq Holding which, sources told The Mail on Sunday, is linked to Mithaq Capital.

Faisal Al Rajhi is in turn believed to be linked to Sheikh Sulaiman Al Rajhi, who is considered the richest Saudi Arabian not a member of the kingdom’s royal family. Forbes estimates Sheikh Al Rajhi, who reportedly has 23 children, is worth $7.7 billion (£5.9 billion).

The vote of confidence from such a powerful backer may provide Burford Capital’s board with a boost, although their intentions are not yet clear.

Senior City sources described Mithaq Capital as a ‘value’ investor that looks to buy shareholdings in undervalued companies.

The development comes at an important time for Burford Capital which finances expensive legal cases in the hope its beneficiaries will win vast sums.

The company, which is helping a Russian oligarch’s wife in her bid to recover £453million from her ex-husband, Farkhad Akhmedov, has spent the last few months under attack from Muddy Waters.

Short selling is when hedge funds borrow shares in a targeted company, sell the shares, buy them back after the price falls, then return them to the original owner and pocket the difference.

Muddy Waters’ allegations resulted in Burford Capital’s share price falling over 70 per cent.

Mithaq Capital’s only other investment in a London-listed business is AIM-listed Tremor International, an advertising technology firm.

The Saudi Arabian investor recently purchased almost 14 per cent of Tremor, making it one of the largest shareholders in the group.

Mithaq Holding did not return calls for comment. Burford Capital declined to comment.

Reports suggest Sheikh Sulaiman Al Rajhi and his brother started their business by charging for camel caravans across the desert.

In 1983, the brothers were given permission to open the country’s first Islamic bank. Since then, the Al Rajhi Bank has grown into one of the country’s most profitable financial institutions.