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.