Firm Offers New Intellectual Property Bonds

September 3, 2002 (PLANSPONSOR.com) - A New York investment firm has come up with a new way to help firms cash in on projected income streams from trademarks, licensing fees, and patents.

UCC Capital, with capital from GE EMX, a General Electric Co. unit, says it hopes to make as much as half a billion dollars in loans to companies that put up as collateral their regular income from patents or from the licensing of fashion logos.

UCC will then bundle the loans into bonds, emulating a strategy that has been used in the US housing market in which mortgage lenders raise money by bundling regular home loan payments into bonds and then sell them on Wall Street.

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 “It is the next evolutionary step in intellectual property securitization,” said UCC founder and president Robert D’Loren, who sees his company exploiting a unique niche.

Loans made by UCC are expected to range from $30 million to $50 million but have no set limit.  UCC said it hopes to underwrite $400 million to $500 million in loans by next summer and twice that amount in the following year. UCC may retain the loans, which are expected to have 7- to 10-year terms, or sell them as so-called asset-backed bonds.

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