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Let’s take a commercial company that
holds rights related to a specific intangible asset.
A patent that was granted to third parties and generates income
(royalties), for instance.
The commercial company can securitise this
patent by transferring its intellectual property rights to
a securitisation vehicle.
External investors finance the securitisation
vehicle so that it may make this purchase; they then receive
securities in return for their investment.
After deducting operating expenses, all income
generated by the granting of this patent makes up the profit
of the activity which will be paid to the securitisation vehicle.
This transaction allows the Transferor (the commercial company)
to release from its balance sheet an asset that might give
rise to risks of collection and problems in recovery connected
to infringement or stability of income; the copyright is thus
customised by means of an ad hoc structure.
Each holder of the securities issued by the securitisation
company (investor) will therefore receive an income proportional
to the number of securities he holds. The holder of securities
of the securitisation vehicle will be able to give, return,
assign, transfer or sell his securities to other holders who
will collect profits related to this activity and, upon settlement,
the possible yield proceeding from the sale of this patent.
This method allows risks or investments to
be divided among several investors who will have been able
to acquire part of the activity that has been securitised.
This transaction allows a group of individual investors to
acquire an asset without having to bear the full investment
alone.
This also allows ownership of a patent to take the form of
a bearer security although by definition it is registered.
The example below illustrates how the transaction is effected.
Step 1: the commercial company owns a copyright
that generates royalties.
Step 2: The investors finance the securitisation
vehicle which purchases the copyright from the commercial
company.
Step 3 : the copyright produces royalties
for the securitisation vehicle which pays the profits back
to the investors
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