Aon Plc has arranged an intellectual property (IP) collateral insurance policy in excess of US$100 million (around SG$136 million) – a bespoke policy that the broking giant believes is the largest of its kind.
The insurance coverage, arranged for the lender, allowed IP-rich agriculture technology company Indigo Ag to borrow the abovementioned amount with intellectual property as collateral. The value of the collateral is insured by a group of insurance markets led by Markel Specialty, with Hudson Structured Capital Management (HSCM) as the biggest capacity provider.
“Markel is proud to have worked with Aon in crafting a unique solution, and looks forward to building this new market with Aon in the future,” said Jim Gray, executive underwriting officer of professional liability at Markel Specialty.
The IP-backed lending transaction marks Aon’s rollout of its intellectual property capital market solution, which features the broker’s proprietary IP valuation tools.
Jim Young, chief financial officer at Indigo – which, through the structure, was able to raise additional funds while avoiding equity dilution – 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 collateralise 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.”
For HSCM Bermuda partner Edouard von Herberstein, this is an example of insurance and insurance-linked securities markets offering risk transfer solutions for intangible assets, adding that they believe there are significant and growing opportunities and interest in this area.
“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,” stated Aon chief executive Greg Case, who described the solution’s launch as a “watershed moment” that brings together Aon’s valuation technology with lenders and insurance markets.
Lewis Lee, CEO of Aon’s IP solutions, highlighted that they are helping to provide innovative growth companies with a path to non-dilutive growth capital. “We are excited to enable them to unlock this valuable asset,” said Lee, “and are now positioned to facilitate a wide range of transactions.”