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ARTICLE · 17 JANUARY 2025

Success Fee Fiasco - Contractual Interpretation And Contingency Clauses

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The High Court ruled in NOR Capital v Kigen that a success fee in fundraising agreements is triggered only by external investments, emphasizing the importance of clear contractual language and alignment on key terms to avoid disputes.

United KingdomLitigation, Mediation & Arbitration
Christopher Charlton
Christopher Charlton
Zoe Carter
Zoe Carter
Madeleine Brown
Madeleine Brown

The vexed question of success fees in fundraising efforts came back before the High Court in the recent case of NOR Capital v Kigen. Construing the relevant terms of the engagement letter in issue, the Court determined that, in line with commercial common sense, the success fee was only triggered by a new money investment.

Background

Kigen, the Claimant, is a software developer. NOR Capital, the Defendant, is an investment banking firm.

Kigen was seeking new investment. Softbank, Kigen's ultimate owner, preferred not to make that investment itself. Softbank therefore introduced NOR Capital to Kigen. NOR Capital was advised that Kigen sought to raise around £30-40m. NOR Capital told Kigen it considered this to be a challenging mandate that would require around 6 months of work. Kigen and NOR Capital agreed an engagement letter (the Agreement).

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