IP securitization transactions are excellent sources of finance, and are sought by intellectual property owners because they offer a convenient source of capital at an attractive cost, and in a manner that is complementary to equity financing.
Flexible Source of Finance
The securitization of Royalty Income can provide financing to IP owners for a broad range of uses, ranging from the funding of research and development activities to the launch of new products. These transactions are extremely flexible in structure, allowing them to be tailored to the specific needs of the IP owner.
Attractive and Consistent Cost of Capital
IP securitization offers capital at an attractive cost for the originator of the IP. alseTIP's management team works with you to define the level of risk to be assumed by the fund, and to keep the cost of capital to a minimum. While we structure our transactions within a well-defined range of returns, our cost is well below that of venture capital or mezzanine funds. alseTIP's cost of capital is not correlated with the volatility of stock prices that can make the cost or availability of equity capital challenging for other types of investment funds.
New Asset Class - Complementary to Equity Financing
IP securitization provides capital in a manner that is complementary to, rather than a replacement of equity capital. IP securitization transactions are not dilutive to shareholder equity holdings. IP securitization transactions can often enhance the interests of the equity investors.
IP securitization transactions can assist you in meeting certain important strategic objectives.
Risk-mitigation
By providing non-recourse financing, secured by the Royalty Interest, alseTIP assumes most of the commercialization risk inherent in a product. For the corporate client, this can facilitate diversification by enabling investment in additional products. For the institutional or individual clients, this can provide a valuable financial diversification tool in order to diminish exposure to long-term market risk.
Liquidity
IP securitization investments can provide immediate liquidity to the IP owners for a revenue stream that would otherwise take many years to be realized.
Unlock Unrecognized Value
Many investors attribute little value to passive royalty streams received by companies. Because of this, valuations often reflect only direct product revenues and earnings and the company’s product pipeline. By selling a royalty or revenue interest, the company can immediately “unlock” that value.
M&A
IP securitization transactions are uniquely suited to enabling acquisitions and divestitures, and in-licensing and out-licensing activities, as they can resolve the frequent differences between seller desires and buyer needs.
IP securitization transactions can act as an attractively-priced layer of financing, limiting the need for the acquirer to deplete cash on its balance sheet, or minimizing the need to issue equity.
In-licensing / Out-licensing
When structuring licensing transactions, the out-licensor usually wants to dispose of the IP assets and receive payment in full at the closing, while the in-licensor seeks to defer the payment through a stream of future royalties pending successful commercialization. alseTIP can facilitate these transactions, acting as a third party by providing the immediate capital desired by the out-licensor, while permitting the in-licensor to pay its consideration in the form of a stream of royalties.
