Snowball has invested in the recently closed Aristata Impact Litigation Fund which supports legal action by under-resourced groups, while achieving uncorrelated financial returns
Investing in a litigation fund represent an innovative and attractive way to achieve financial returns while driving social and environmental impact, according to UK-based Snowball, an investor in the Aristata Impact Litigation Fund I, which recently closed at £52m.
Litigation funding finances a commercial litigation claim on behalf of a claimant, where the backer takes a share of the proceeds if the case is successfully resolved.
Aristata has made litigation funding an impact investment tool by focusing on funding legal action taken by groups around the world in response to damaging activity by companies, where a win would have a beneficial and wide-ranging social or environmental impact.
Snowball, which did not reveal the size of its investment, joined a group of backers for the fund that included Capricorn Investment Group’s Sustainable Investors Fund, and the Soros Economic Development Fund, plus a number of foundations, funds and other impact investors.
Sean Farrell, Snowball’s chief investment officer, said that Aristata was an example of an innovative asset manager whose investments helped make a meaningful systemic impact and address wrongs at the same time as generating attractive returns for investors, while also having the added advantage of being uncorrelated to major asset classes.
“We encourage more owners and stewards of capital to investigate such opportunities – they may require more work, but we believe the opportunities are compelling. Not doing so leaves portfolios exposed to long-term risks that are often not adequately compensated,” he said.
In a July interview with Impact Investor, Aristata CEO Rob Ryan said the fund supported litigation by groups that would not normally have the financial clout to take on a large well-resourced company in court. Potential human rights abuses in the supply chains of large extractive industries companies and the impact environmental disasters in the developing world were among themes of interest to the fund, he said.
Snowball is an impact fund-of-funds making investments aiming to contribute to social equity and environmental solutions, while targeting a risk-adjusted annual return of 6-7%, net of fees, over the long term. Its CEO Daniela Barone Soares argued in a 2022 interview with Impact Investor that impact investing needed to bring in a more diverse range of investors and adopt a broad view of possible investments.