China has its first standardized product of the securitization of intellectual property assets as “the Phase I Asset Backed-Securities Special Plan of the First Capital-Cul&TechFL”(Cul&TechFL Phase I ABS) was approved successfully at the Shenzhen Stock Exchange recently.
The Cul&TechFL Phase I ABS’s total assets could reach 733 million yuan (106 million U.S. dollars) and its underlying sponsor is the Beijing Culture & Technology Finance Lease Co., Ltd (Cul&TechFL).
Zhou Maofei, President of Cul&TechFL’s parent firm Beijing Cultural Investment Development Group(BCIDG), said, all the capital to be raised from Cul&TechFL Phase I ABS will be invested to new projects of intellectual property finance lease, which will form a closed–loop of capital and further magnify business scale.
Zhou said, the company will continue to enrich financing channels, offer intellectual property financing services for more culture and technology enterprises especially medium- and small-sized ones and make intellectual property really become the “catalyst” for driving enterprises’ innovation and development.
The Cul&TechFL Phase I ABS’s underlying assets are “the intellectual property finance lease” with the patent right and copyright as subject matters, different from many culture and technology companies who issue directly products of asset securitization with their own intellectual properties.
The Cul&TechFL Phase I ABS’ underlying assets involve altogether 51 intellectual properties, like patent for invention, patent for utility models and copyright, and cover many niche sectors in cultural and creative industries, such as artistic performance, film and television production and distribution, information technology, digital publishing etc.
While, the Basic Assets of the Cul&TechFL Phase I ABS are the receivable claims to be formed by taking these intellectual properties’ future operational cash flow as the basics of debt repayment.
It is learnt that to aim at the problems of value assessment and risk control in the securitization of intellectual property, Cul&TechFL has made a team of 120 workers, explored and formed a comparatively mature assessment method and risk control system of intellectual property.
All the intellectual properties entering the underlying assets of the Cul&TechFL Phase I ABS have gone through rigid risk examinations.
In addition, BCIDG has been introduced as the Undertaker of Deficiency Payment, one way of external credit enhancement, which has effectively improved the Cul&TechFL Phase I ABS’ credit rating and risk resistance capacity.
The Cul&TechFL firstly created the business model of intellectual properties finance lease in September 2015.
By this model, Cul&TechFL has provided directly over 8 billion yuan financing capital for more than 400 culture and technology enterprises in the past three years, among them the medium-and small-sized enterprises accounted for over 75 percent and private enterprises 92 percent.