What a day for a “portfolio update” from Duke Royalty, the “provider of alternative capital solutions”. And just the thing for anyone “working towards financial independence”. Who knew Harry and Meg had already set up an Aim company?
Duke Royalty is unique in the UK, although its royalty model is well known in North America. Duke’s royalty income-based model provides cash generation and an attractive yield. Duke has the finance to grow the business and companies are becoming more aware of the attractions of royalty-based finance rather than bringing in private equity backers or floating on the stockmarket.
Duke Royalty brings royalty finance concept to Britain, investing millions in established SMEs in exchange of share of revenue.
Duke Royalty, a UK-quoted royalty financing company, is set to increase its portfolio in Ireland following the acquisition of British financier Capital Step in February.
The odds are that if you live in the UK and rest of Europe you have never heard of royalty finance. However, more than a decade after the 2008 financial crisis and on the back of a recent sell-off in global equity markets, the word around royalty financing is inevitably spreading rapidly.
Thanks to a relatively light-touch regulatory environment, the UK’s ‘alternative finance’ sector has flourished in the eight years or so since the first equity crowdfunding and peer-to-peer lending platforms came on stream.
A form of alternative finance is facing a reputational revival in the UK. Royalty financing, where capital is provided to a business in return for a cut of that company’s revenue, is typically associated with mining, particularly with development projects.
Thomas Hoegh tells a story about the aftermath of 9/11. Back then, the Norwegian internet investor was the largest shareholder in the travel website lastminute.com. The start-up had made progress in convincing airlines to offer discounted seats, yet had struggled to persuade hoteliers to list empty rooms on the platform.