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First IP-backed loan approved in Singapore

Singapore shoe maker Masai has borrowed money using its intellectual property (IP) as collateral, in the first loan of its kind to be approved in Singapore.06 Jun 2016

The IP Financing Scheme (IPFS) was introduced to help companies use their IP to raise capital, the Intellectual Property Office of Singapore (IPOS) said

Under the scheme IP valuers approved by IPOS determine the value of a patent, and the Singapore government partially underwrites the loans which are granted by one of four participating financial institutions (PFIs). 

"While using tangible assets such as machinery and inventory to apply for loan financing is a common practice for companies, using intangible assets in the form of patents is a recent development," IPOS said.

The Masai loan was backed by DBS Bank, one of the four PFIs, IPOS said. 

DBS’ head of SME banking Joyce Tee, said: "As the principal banker for the Masai Group we recognised that the patents acquired would essentially translate into future earnings. We are very pleased that the collaboration with IPOS to monetise these intangible assets, recognising the patents as an alternative security, has worked well. With this as the first successful case of an IP-backed loan in Singapore, we … can help our SMEs unlock the hidden wealth in their intangible assets and convert into cash for their business growth."

Andy Chaw, chief executive of Masai Group said the company will use the loan to strengthen its IP portfolio and marketing internationally, and to increase research and development.

Chaw bought the brand from its original Swiss owners in 2012 when the company went bankrupt, according to the group's website.

The IPFS scheme was introduced two years ago. It will now be extended to other types of IP such as trade marks and copyright from 1 July 2016, and will run until 31 March 2018, IPOS said.

Singapore-based IP expert Bryan Tan of Pinsent Masons, the law firm behind Out-Law.com said: "As both IP inventors and financial institutions are new to collateralising this asset class, it will undoubtedly take time for this to take off. Notably, the IP involved here is 'mature' IP which was acquired and would have provided parties with some comfort."

IPOS has added a new institution, AFC Merchant Bank, to the scheme alongside the DBS Bank, United Overseas Bank and Oversea-Chinese Banking Corporation, it said.