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The History and Vision for REX Royalties
Over many years of negotiating transactions, for both myself and as an investment banker representing clients, many of which related to the financing of companies, I reached the conclusion that an investor was much better advised to buy a piece of a growing company’s revenue flow than becoming an owner of the business.
I also concluded that owners of businesses were better advised to accept a lessened profit, as caused by the sale of a royalty and resulting payment obligations, while retaining the greatest equity and control position possible.

If a business is to succeed it is highly likely the revenues will increase and if so the royalty owner will benefit. However, ultimately the value of an ownership interest is dependent on the level of reported profits and a large element of profit determination is management discretionary. The issues which influence the declaration of profits include strategic tax minimization programs, investments made in anticipation of future needs and executive compensation arrangements. All of which are beyond the control or influence of the investor. Also, it is generally understood that there are many factors which are difficult to predict and which can adversely impact a company's profitability

In 2004, I filed a U.S. patent application on an approach to using royalties in the financing of a business. In 2010 patent # 7,813,999 issued. The approach envisions Exchange Traded Royalties (ETRs) and includes a protocol for assuring the royalty issuer's contractual compliance.

The REX Royalty Comparator (RRC) allows users to compare the annual results of royalties using different terms for the same royalty issuer, using the same revenue projections. This unique and proprietary program will be of great value to those considering and negotiating the terms of a royalty.

Believing that royalties are a fair and reasonable means of an investor participating in the progress of a business, a fatwa declaring the process to be Sharia compliant was sought and obtained. The fatwa permits a potentially large body of investors to buy royalties, who otherwise are not able to participate in a range of company financing opportunities.

There are many hundreds of thousands of successful and established, privately owned companies in the world. Many of the owners of these companies wish both to have the advantage of increased capital availability and to remain privately owned. The sale of royalties is a reasonable way for these company owners to achieve their two objectives.

There are also some publicly traded companies in which the managers and/or larger shareholders would like to go private and a royalty equity exchange could be an effective means of achieving the desired result.

Finally, there are a range of government and commercial interests having assets and projects, which could be monetized through the creation and sale of royalties, especially were the royalties to be Exchange Traded Royalties.

The successful creation of a royalty agreement meeting the needs of both issuer and purchaser requires experience and an understanding of the process.

Arthur Lipper, Chairman, British Far East Holdings Ltd. &
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