Aon completes another collateralized intellectual property financing

Aon has announced the completion of another collateralized intellectual property transaction to help brain-assessment device innovator BrainScope secure a financing solution for its intellectual property assets.

The insurance and reinsurance broker previously revealed a solution to help intellectual property rich companies to realise the value of their proprietary IP, in a transaction that saw insurance-linked securities (ILS), reinsurance and transportation focused investment manager Hudson Structured Capital Management Ltd. (HSCM) participate as the largest market.

That deal was cited as “an innovative ILS friendly structure” by HSCM and intellectual property is seen as an area of potential expansion for the ILS fund market, as the collateralized debt structures created through these deals are seen as appealing assets to invest in.

During our recent webcast on innovative insurance-linked investments (available to watch on-demand here), intellectual property was discussed as one future area of potential for the ILS market, by financing intangible intellectual property assets.

Today’s announcement from Aon is presumed to be a similar kind of transaction, that leveraged capital market investor appetite to support a collateralized insurance and debt financing arrangement for BrainScope.

Aon’s Intellectual Property (IP) Solutions said these solutions help companies avoid capital raises that can result in dilution of equity value, but help them realise the value embedded in their intellectual property (IP).

Aon’s Intellectual Property (IP) Solutions team used proprietary IP valuation tools and a collateral protection insurance policy to help create an IP-collateralized debt structure, enabling BrainScope to raise additional funds without diluting its equity value.

Aon noted that IP value is not widely understood in capital markets, but there is significant opportunity as IP and intangible assets represent 90% of the value of Fortune 500 companies.

By valuing intangible assets and structuring capital solutions that leverage such value, Aon said it is helping companies access non-dilutive growth capital.

This specific deal provides BrainScope with up to $35 million of capital to fund growth of its commercial activities and to further develop new clinical applications on its platform.

“More than four million patients seek care each year at hospital emergency departments for mild traumatic brain injuries. BrainScope is the only FDA-cleared technology that can objectively assess both brain bleeds and concussions in minutes and bring the needed diagnostic insights to help steer these patients to appropriate care,” Susan Hertzberg, CEO of BrainScope commented. “We are thrilled that we will be able to expand our commercial footprint to reach more hospitals and connect with concussion centers in light of the real need for objective detection of brain injury. BrainScope will collaborate with Aon in order to leverage its significant intellectual property expertise and innovative capital solutions while furthering BrainScope’s mission to transform patient care in brain injury and disease.”

“Innovation is the key to a growth economy, but intangible assets are the foundation. That is why we are bringing unique solutions to the market to help growth stage companies like BrainScope maximize the value of their intellectual property,” added Lewis Lee, CEO of Aon’s Intellectual Property Solutions. “We are excited to help IP-rich companies like BrainScope unlock the value of these assets and provide them greater access to capital so they can further pursue their growth ambitions without diluting their ownership.”

We don’t know whether any ILS capital providers were involved in this new IP transaction structured by Aon, but as IP is a topic increasingly cropping up in discussions with ILS funds, there’s a good chance the deal will have at least been shown to some ILS markets.

These innovative IP arrangements that Aon is structuring help companies better recognise the often significant value that is often locked-up in intangibles, such as their intellectual property.

It’s a perfect example of bringing together data analytics, with traditional insurance processes and capital markets technology, including from ILS specialist investors, to create a unique financing product that also transfers risk for the IP owner and could close an evident gap, while helping to unlock growth for companies with valuable IP.

The transaction was entered into using Aon’s Bermuda domiciled Class 3 and Class C insurer and segregated accounts company White Rock Insurance (SAC) Ltd. which is managed by Aon Insurance Managers.