Aon unveils new IP capital market solution in 'watershed moment'

Re/insurance broker Aon has unveiled a new intellectual property (IP) capital market solution, with the completion of a $100 million lending transaction, said to be the largest of its kind.

Chief executive Greg Case described the launch of a new solution as a "watershed moment" that brings together lenders, insurance markets and Aon's proprietary valuation technology to "create a new alternative financing opportunity for IP-rich companies."

"Intangible assets are the foundation of today's global economy, and Aon is innovating first-generation solutions to help companies both protect and maximize the value of these important assets," said Case.

The deal involves agriculture technology company Indigo Ag that is borrowing over $100 million from a lender utilising its IP as collateral, insured by a group of insurance markets led by Markel Specialty, and the largest capacity provided by Hudson Structured Capital Management (HSCM).

Aon arranged for the lender an IP collateral insurance policy, claimed to be the largest of its kind, in excess of $100 million.

By combining proprietary IP valuation tools and a collateral protection insurance policy, the collaboration enabled an IP-backed debt structure that helped Indigo raise additional funds while avoiding equity dilution.

Aon believes that  IP value is largely not understood in the capital markets, while it could potentially be the most valuable asset a company owns.

Lewis Lee, CEO of Aon's IP solutions, said: "Aon is helping to provide innovative growth companies with a path to non-dilutive growth capital that preserves the ownership and value for their founders and early investors. We are excited to enable them to unlock this valuable asset and are now positioned to facilitate a wide range of transactions."

Jim Gray, executive underwriting officer of professional liability at Markel Specialty, said: "Markel is proud to have worked with Aon in crafting a unique solution, and look forward to building this new market with Aon in the future."

Edouard von Herberstein, partner at HSCM Bermuda, added: "We are excited to participate in the financing of IP assets through an innovative ILS friendly structure. This is yet another example of insurance and insurance-linked securities markets offering risk transfer solutions for intangible assets. We believe there are significant and growing opportunities and interest in that sector."

Jim Young, Indigo's chief financial officer, commented: "As an innovative company using microbial and digital technologies to facilitate positive transformation of the agriculture system, Indigo sought to find a way to collateralize its extensive IP asset portfolio. In a first of its kind deal, Aon leveraged an approach that articulated the value of our IP – making it a true capital asset – which allowed us to secure a significant amount of non-dilutive debt financing."