A novelty on unlocking businesses' potential growth: Intellectual Property Securitisation

There have been on-going attempts in finance sector in order to create different financial instruments that appeals to variety of investors with different risk appetites. Asset backed securitisation took attention especially in the recent global financial crisis which was caused by the collapse of mortgage bubble. However, securitisation could be beneficial if used for creating financial instruments out of intellectual property rights such as patents or trademarks. In this study, we aim to investigate advantages and disadvantages of intellectual property securitisation by looking at various cases starting from the famous “Bowie Bonds”. It is found that methods such as tranching or bundling could reduce the risk of IP security deals. Also, in order to fully benefit from intellectual property assets, the pricing of those assets should be done in caution. In that sense, different pricing strategies of patents such as real-options pricing are analysed. To sum up, IP securitisation still has profit potential as long as it is done by taking lessons from the global financial crisis