Like tangible property, intangible corporate assets such as intellectual property are also be used to secure future income. Securitization of IP dates back to, at least, the #DavidBowie Bonds of the mid-1990s. Bowie securitized his future music royalties with bonds in favor of Prudential Insurance for 10 years with a 7% interest, all backed by the chameleonic singer’s portfolio of songs in case of default.
The transaction reported Bowie $55M in revenue and turned out to be a fantastic transaction for the insurer as well. Securitization of intellectual property assets is one of the smartest ways to raise capital and distribute the risk by companies that have valuable IP.