Duke Royalty and Oliver Wyman have agreed to collaborate to provide a royalty-based capital financing solution for the European market, with a focus on healthcare companies. The deal will see Duke Royalty provide capital and acquire the royalties, while Oliver Wyman will bring in its wide expertise on the European healthcare market as well as quantitative support.
Duke Royalty, formally Praetorian Resources, was born in 2015. The company aims to provide royalty financing solutions, an alternative form of financing used for many years in North America, to Europe. The firm has developed an innovative royalty financing model for well-functioning European businesses. The solution involves a tax efficient structure and exclusive partnerships, through which the cost for companies seeking capital is lowered – providing a robust vehicle for improving shareholder returns.
Royalty financing is an alternative means of raising capital from the more traditional forms of capital raising, debt financing and equity financing. It allows a company to raise capital for expenditure by providing, in return, a small percentage of the company’s future revenues or cash flow. Royalty companies are differentiated from debt providers by their payments fluctuating with revenue, thus better aligning them with equity holders. Royalty funding provides a number of advantages, including fast deal structuring, preserves equity ownership, lower default risk and variable costs based on revenue flows, and is highly flexible.
The collaboration between Oliver Wyman and Duke Royalty will see each provide key areas of expertise in the development of growth value and innovation within the domain of royalty financing solutions. The two firms’ long term partnership commitment aims to provide royalty solutions to Europe’s healthcare market.
Consulting firm Oliver Wyman has a long track-record in the European healthcare system, with risk experts able to provide key insights into the valuation of biopharmaceutical and other healthcare intellectual property for its Fortune 1000 clientele. Oliver Wyman’s expertise and proprietary datasets and methodologies will form the background for the alternative financial solutions. The deal will see Oliver Wyman’s expertise leveraged to “analyse and assist in the acquisition of royalty interests for regulatory-approved, patent-protected ethical pharmaceutical and other healthcare products.”
Duke Royalty’s role in the deal will be to raise capital, to structure definitive agreements and to acquire the royalty derived from deals. The firm believes that its new offering to the UK market improves on the structure of its Canadian operation on two fronts: exclusive partnerships will provide companies with higher levels of expertise and deal flows, while time-tested corporate structures in Guernsey will provide strong shareholder returns.
Commenting on the collaboration, Neil Johnson, CEO of Duke Royalty says: “North America has built a number of highly successful and significant sized royalty companies in both the private and listed arenas. The Duke Royalty and Oliver Wyman collaboration will provide this progressive and compelling financing structure to the global healthcare industry. We are excited to present a new opportunity for healthcare companies to receive capital yet retain control, and look forward to providing UK public investors predictable revenues and a stable dividend.”
Scott McDonald, CEO of Oliver Wyman, adds: “Oliver Wyman is proud to partner with Duke Royalty and combine our deep healthcare experience with their royalty financing acumen to unlock value and ultimately fuel innovation in healthcare.”