Insurance and reinsurance broking giant Aon continues to blur lines, as today’s announcement of the launch of an intellectual property financing solutions strategy under registered investment adviser Aon Advantage Funds LLC, and a $300 million commitment to it secured from M&G Investments shows.
Aon has been expanding its activities in the intellectual property space in recent years, with this an area that it has constructed new and innovative risk transfer and financing solutions to help those with IP, value, secure and finance or monetise it.
This has included risk transfer arrangements, some of which have been collateralized and backed by reinsurance capital from the capital markets and insurance-linked securities (ILS) funds.
Most recently we reported that Aon has been working with insurtech Vesttoo on intellectual property insurance-related financing solutions, with the latter helping to bring capital markets capacity to the brokers proposition.
Previously we reported that Lewis Lee, CEO of Aon’s Intellectual Property Solutions, said that the emerging asset class of intellectual property assets could be a massive opportunity for ILS funds and their investors.
Previously we also reported on the completion of specific IP related deals that Aon had arranged and structured, including a collateralized intellectual property transaction to help brain-assessment device innovator BrainScope secure a financing solution for its intellectual property assets.
We also previously covered the news that Hudson Structured Capital Management Ltd., an insurance-linked securities (ILS), reinsurance and transportation focused investment manager, has also provided capacity to back Aon’s new financing solution for intellectual property assets.
Fast-forward to 2023 and Aon is taking things a step further, marshalling capital from major investors to support its expansive growth into the intellectual property financing space.
The new investment vehicle aims to provide innovative growth companies, primarily in North America, with new ways to access capital based on the value of their intellectual property (IP), Aon explained.
The broker said that M&G Investments, a global asset manager through its Catalyst private assets strategy, has committed $300 million in capital to the new IP focused investment vehicle.
So far, Aon has supported over $1 billion of financing in the IP market, through its IP Solutions group offering and the lending strategies offered under the Aon Advantage Funds brand.
“Aon Advantage Funds can help organizations protect and grow their business by matching capital with companies that have transformative technologies, enabling better capital decisions for emerging companies,” explained Matthew Farrar, managing partner and head of Aon Advantage Funds, LLC. “Working with M&G allows us to help create a more sustainable world by providing minimally or non-dilutive capital to innovative companies.”
The he fund will target allocations to insured first lien IP-backed loans, with equity-backed, innovation-led organizations, and opportunities that have a strong potential to drive a positive impact for society through the application of their IP will be prioritised, Aon said.
“We are looking forward to helping innovative technology businesses accelerate their development,” Thierry Masson, M&G head of Catalyst – Americas added. “With Aon’s IP Solutions, which help us understand the value of a business’ intellectual property, and Aon’s insurance brokerage service, we can offer financing solutions as innovative and unique as the technology companies benefiting from this capital.”
Yes, this isn’t exactly insurance-linked securities (ILS), but it is tangentially interesting and attractive to ILS investors, particularly the collateralized IP financing type deals we linked to above.
But more interesting perhaps is the way Aon is positioning itself in this space, as originator, broker, investment adviser, arranger and source of capital, to underpin the IP lending investment and also any collateralized risk transfer type arrangement to help in financing or recognising the IP’s value.
Aon’s IP related offering is really a full-stack type approach, and it brings together a number of areas of the business and deep expertise, which has made it possible for the company to develop what could become a new and interesting asset class, with the potential to attract capital related to the ILS market and ILS investors.
The side of the trade that is potentially most interesting to ILS and related investors is the collateralized financing of IP, that allows intellectual property-rich companies to realise the value of their proprietary intellectual property upfront.
Combining that with the IP-lending capital this new strategy provides, makes for an innovative positioning that could become an area of meaningful growth for Aon.