Aon announces launch of new solution to create greater access to capital
Aon , a global professional services firm providing a broad range of risk, retirement and health solutions, announced the launch of its Intellectual Property (IP) Capital Market Solution along with the close of a significant IP-backed lending transaction worth over $100 million, believed to be the largest such transaction ever consummated.
“Aon is 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. 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.” – Chief Executive Officer of Aon, Greg Case.
The first deal involves Indigo Ag, a high-growth, IP-rich agriculture technology company, which is borrowing over $100 million from a lender utilizing its IP as collateral, with the value of that collateral insured by a group of insurance markets led by Markel Specialty. Hudson Structured Capital Management (HSCM) was the largest capacity provider.
“Markel is proud to have worked with Aon in crafting a unique solution, and look forward to building this new market with Aon in the future.” – Executive Underwriting Officer of Professional Liability at Markel Specialty, Jim Gray.
“We are excited to participate in the financing of IP assets through an innovative ILS friendly structure. This is yet another example of insurance and insurance-linked securities markets offering risk transfer solutions for intangible assets. We believe there are significant and growing opportunities and interest in that sector.” – Partner at HSCM Bermuda, Edouard von Herberstein.
Building upon Aon’s IP valuation approach, Aon arranged for the lender an IP Collateral Insurance policy in excess of $100 million. The bespoke policy is believed to be the largest of its kind. By combining proprietary IP valuation tools and a collateral protection insurance policy, this collaboration enabled an IP-backed debt structure that helped Indigo raise additional funds while avoiding equity dilution.
“As an innovative company using microbial and digital technologies to facilitate positive transformation of the agriculture system, Indigo sought to find a way to collateralize 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.” – Indigo’s Chief Financial Officer, Jim Young.
IP value is largely not understood in the capital markets. While IP may be the most valuable asset a company owns, current accounting standards typically do not allow internally developed IP to be explicitly valued as part of a company’s balance sheet. This accounting treatment, and historic lack of creditable valuation methodologies, results in most growth companies turning to dilutive equity to finance their growth.
“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.” – CEO, Aon’s IP solutions, Lewis Lee.
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By leveraging CoverWallet, the insurtech startup Aon acquired in January 2020, Aon is further expanding the solutions and services it provides to 30 million small and medium-sized US businesses. New and existing clients now benefit from a dedicated team for small and middle market businesses, a user-friendly digital platform, and self-service tools.