Aon targets IP-backed lending growth with product launch

Aon’s IP Solutions group has launched a product to support loans issued to high-growth companies that use intellectual property (IP) as collateral.

The broker says it hopes the novel form of financing will increase the options for IP-rich businesses in early-stage development, when access to funding from equity markets can typically be expensive or hard to obtain.

Aon CEO Greg Case described the launch as a “watershed moment”, and underscored his belief that intangible assets are the foundation of the global economy.

In a press release on Tuesday, Aon said the product had already been used in a deal that provided Boston-based agricultural technology firm Indigo with a $100mn policy and loan.

Aon’s most recent solution brings together a panel of 20 banks with insurers to provide the lenders with additional security needed to underwrite loans to companies with assets largely tied up in IP.

Capacity for the insurance product comes from Aon’s MGA Aon Underwriting Managers, which will underwrite the first $50mn of each new risk. Additional capacity will be provided by a panel of excess insurers including Fidelis and Allianz Global Corporate & Specialty.

The launch of the solution, which is provided by Aon’s IP Solutions group, follows a surge in recent IPOs and interest in alternative funding solutions for entities such as special purpose acquisition companies (SPACs).

Funds raised from lenders, backed by this product, are typically used by early-stage companies seeking to grow quickly and, in some cases, go public.

Indigo is an agricultural technology company that uses microbial technology to improve the yields of crops such as cotton, wheat and soybeans. The $100mn in funds raised was secured using the company’s IP as collateral.

The Indigo deal was underwritten by insurance markets including Hudson Structured and Markel, which led the program.

The latest product follows a slew of recent innovations in the transactional and management liability markets that have emerged amid the widespread economic uncertainty precipitated by Covid-19.

Commenting on the new venture, Case said Aon was committed to helping clients “navigate an increasingly complex world”.

“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,” he added.

“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,” Case added.

Aon IP Solutions CEO Lewis Lee added: “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.” 

Aon’s deal appetite for this class of business is understood to fall within the $25mn-$75mn range.