Global re/insurance broker Aon has launched an intellectual property capital market solution designed to help companies protect and maximise the value of its intangible assets.
Aon has also revealed that a $100 million deal involving agriculture technology firm Indigo Ag is the first deal to be completed via the new solution.
Indigo Ag is borrowing from a lender utilising its IP as collateral, with the value of that collateral insured by a group of insurance markets led by Markel Specialty.
Hudson Structured Capital Management (HSCM) was the largest capacity provider.
Aon arranged for the lender an IP collateral insurance policy in excess of $100 million, one that the broker believes to be the largest of its kind.
While IP may be the most valuable asset a company owns, current accounting standards typically do not allow internally developed IP to be explicitly valued as part of a company’s balance sheet.
Aon says this accounting treatment, and historic lack of creditable valuation methodologies, results in most growth companies turning to dilutive equity to finance their growth.
By combining proprietary IP valuation tools and a collateral protection insurance policy, Aon says this collaboration enabled an IP-backed debt structure that helped Indigo raise additional funds while avoiding equity dilution.
“Aon is committed to helping clients navigate an increasingly complex world,” said Greg Case, Chief Executive Officer of Aon.
“The launch of this solution is a watershed moment, bringing together innovative lenders and insurance markets with Aon’s industry-leading, 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 maximise the value of these important assets.”
Jim Gray, Executive Underwriting Officer of Professional Liability at Markel Specialty, added, “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.”
“As an innovative company using microbial and digital technologies to facilitate positive transformation of the agriculture system, Indigo sought to find a way to collateralise its extensive IP asset portfolio,” noted Jim Young, Indigo’s Chief Financial Officer.
“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.”
