Adastra IP valuation expert Christine Ng explains latest IP-backed finance developments in Malaysia at WIPO IP finance event

Speaking at last week’s World Intellectual Property Organization conference on IP-backed finance -- IP Finance Dialogue: The Value of Intangible Assets -- Christine Ng, a director of Malaysia-based IP experts Adastra IP, talked attendees through the latest developments in IP finance and IP valuation in the Malaysian marketplace, as well as elsewhere in the South East Asia region.

She said: “Regionally in Southeast Asian countries there have been pockets of activities usually led by the respective Intellectual Property offices of countries such as Singapore, Malaysia, the Philippines, and Indonesia.” She then touched on WIPO’s support for education in these countries aimed at training IP valuers and also a wider outreach explaining IP valuation for financing purposes.

Christine then explained how this educational outreach is aimed at four main groups.

• IP service providers and valuers, as well as the relevant professional bodies focusing not just on IP valuation, but also its use in raising finance. “There's an obligation for valuers to understand the standards, methods, approach and frameworks” and to communicate IP value both to the owners and the lenders.”

• IP owners need to be educated on how they might be able to use the value of their IP to leverage funding, particularly debt, although to a lesser level than the actual IP valuers.

• Financial institutions, lenders, guarantee providers, and investors. The main educational thrust here should focus on helping them understand the how IP valuation works and how to interpret and apply the information provided to them in IP valuation reports. Effectively, “how investors and lenders can assess the strength of a company based on the value that is been assessed in the valuation reports,” as well as the role that guarantee companies can play in credit enhancement or de-risking lending if banks decide to lend on the basis of a company’s IP.

• Regulators, including capital market regulators and central banks. “Advocacy and regulatory support is critical.” Discussions are happening with regulators to create guidelines, for example, the do's and don'ts in terms of lending against intangibles; but also on clarification of compliance issues surrounding bank capital adequacy rules.

Responding to a question on how banks in the region are adapting to offer IP finance loans, she said while some are at an early stage of awareness of IP finance and others are sceptical, a number of institutions are definitely interested and are asking intelligent questions that suggest they are serious about developing lending propositions based on IP value.

“They are asking direct questions, questions such as the cost and the expertise to do valuation for lending purposes. They are also looking at the concern about the reliability and credibility of the reports and the valuers, the recovery aspects, the disposal of the IP assets in cases of distress. And also, for example, the need for internal expertise among the credit team, or even the product team to understand IP.”

She added: “These are tough questions, but I think they are the right questions… From my observation, the banks [understand] that if they're going to have a program to lend against IP it has to be sustainable.”

Banks are also looking at practical considerations: for example, the cost of conducting an IP valuation, cannot be too burdensome for the borrowers, particularly given that there can be no guarantee.

Finally, banks are exploring how they can build a portfolio of IP-backed loans and, she suggests, building such a portfolio will need a standardised, repeatable approach to IP-backed lending to individual clients.

Adastra IP specialises in intellectual property rights globally, with a particular focus on India, Malaysia, Singapore, Indonesia, The Philippines, Vietnam, and Thailand. Through an exclusive partnership with Inngot, it markets Inngot’s IP profiling, valuation and management software solutions in Malaysia.

Christine Ng is a leading figure in IP valuation in the region. A Certified Valuation Analyst and a member of the International Association of Certified Valuation Specialists (IACVS), she is also a member of the Technology Expert Committee with the Asian International Arbitration Centre (AIAC) and serves as an external expert for the European Commission’s European IP Helpdesk. She made the list of the Global Top 300 IP Strategists in IAM's 2023 edition of Strategy 300 individuals in the area of Valuation and the IAM Strategy 300 Global Leaders 2024 edition in the area of management and transactions of IP rights.

WIPO launched its IP-backed finance project in 2022 with the High-level Conversation on Unlocking Intangible Asset Finance (at which Inngot CEO Martin Brassell was a key speaker, as he was also at last week’s event). Last week’s conference is available to view online in full on the WIPO website.