Introduction
In today’s knowledge-driven economy, intangible assets are becoming central to enterprise value creation. Beyond traditional physical assets, intellectual property (“IP”) rights, including trademarks, patents, and copyrights, now serve as key drivers of competitive advantage, revenue generation, and market positioning. For consumer-facing businesses in particular, trademarks embody brand identity, customer loyalty, and goodwill, often representing a significant portion of a company’s economic or enterprise value.1
This article examines the growing potential of IP, specifically trademark portfolios, as financeable assets within the Nigerian market, specifically through securitisation. It considers how the royalty and licensing income generated by IP rights can be structured and monetised to raise capital, distinct from more familiar models of IP-backed lending, as well as the practical considerations involved in recognising and structuring these rights as bankable assets. We also discuss the applicable regulatory and legal framework governing securitisation in Nigeria and evaluate the commercial opportunities this presents for consumer brands, alongside the challenges that may arise in implementing such structures.
Conceptual Framework: IP (Royalty) Securitisation
Securitisation is, at its core, the process of converting predictable future income streams generated from identifiable assets into financial instruments that can be offered to investors.2 In the context of IP (royalty) securitisation, particularly trademark securitisation, the process involves identifying trademarks that generate stable and quantifiable royalty income, typically through licensing or franchise arrangements, and structuring those future cash flows through a legal and financial framework to raise capital upfront.
In practice, the process typically involves three stages: (i) the originating brand owner identifies income-generating trademarks within its portfolio; (ii) those marks and their associated licensing income streams/royalties are assigned fully to a special purpose vehicle (SPV), an independent legal entity created solely for the transaction; and (iii) the SPV issues asset-backed securities to investors, repayable from the royalties and other income generated from the use of the trademark. The SPV’s ultimate duty is to hold the transferred assets, issue the requisite investment instruments, and ensure appropriate returns are paid to the investors. Crucially, the assignment of the trademark portfolio to the SPV must be a true sale so the SPV is bankruptcy-remote and investors are protected even if the originator becomes insolvent.3
It is important, however, to distinguish securitisation from collateralised lending, as they are fundamentally different financing structures. In traditional IP collateralisation, the IP is pledged as collateral or security for repayment of the loan. The fundamental credit assessment is based on the borrower’s financial standing, and enforcement of the IP (trademark) occurs only upon the borrower’s default.
In a securitisation, by contrast, the trademark is the underlying revenue-generating asset itself; the entire financing structure is built upon the predicted stability and performance of its cash flows, independent of the originator’s broader financial condition. This distinction is not merely conceptual. The structure adopted determines how risk is allocated between the originator and investors, the extent of credit enhancement required and, consequently, the pricing and attractiveness of the securities to investors.
A classic example of IP securitisation is Bowie Bonds, a 1997 royalty securitisation, in which musician David Bowie securitised royalties from 287 songs to raise USD 55 million, with the bonds carrying a 7.9% interest rate and a 10-year maturity, demonstrating the transformative financing potential of a well-structured IP securitisation.4
Legal Nature of Trademarks as Assets in Nigeria
Under Nigerian Law, trademarks are recognised as proprietary rights capable of ownership, transfer, and commercial exploitation under the Trademarks Act, 1967 CAP T13 Laws of the Federation of Nigeria (“LFN”), 2004 (the “Trademarks Act”), and a registered trademark confers on the proprietor the exclusive right to use the mark. The proprietary nature, transferability, and potential to generate licensing fees or royalties make them relevant for securitisation.
Proper recordal of transfers or security interests is essential to perfect title, support enforceability, and protect investors, and the ability to assign trademarks, subject to applicable legal requirements, provides structuring flexibility without necessarily disrupting underlying business operations. In that sense, the legal character of trademarks under Nigerian law provides a basis for their use as underlying assets in securitisation transactions, subject to practical considerations around valuation, enforcement, and regulatory compliance.
Regulatory and Legal Framework for Trademark Securitisation
Trademarks Act: Although the Trademarks Act does not expressly provide for trademark securitisation, it provides for the procedure for the assignment of registered trademark and related receivables, without divesting the entire business5.
The Trademarks Act obligates an assignee to register the assignment of the trademark and/or such specific terms, which may include the royalties, with the Trademark Registrar.6 The implication of an unregistered assignment is that the document evidencing the assignment would not be admissible in any court as proof of title7. In this case, where the trademark and/or the royalties accruing therein are assigned to an SPV, where the SPV fails to register its title, it risks being unable to enforce its rights against third parties or the creditors of the assignor in insolvency proceedings. This may also negatively affect the credit rating of the securities the SPV seeks to issue.
This is the same position in the United States and the United Kingdom, where failure to record an assignment with the Patent and Trademark Office within the stipulated time does not affect its validity between the parties, but only renders it void against a subsequent purchaser for value without notice.8 For example, the Court in A.B. Chami v. W.J. Bush & Co. Ltd (1996) F.H.C.L.R 115 held that, in the event of a trademark assignment, proof of the assignment must be provided and an application made to the Registrar to record the assignment before the assignee’s title can be recognised by the Court.9
Companies and Allied Matters Act 2020, as amended (“CAMA”): CAMA provides the corporate law framework under which SPVs are constituted. Because a securitisation SPV issues asset-backed securities to investors, it must be incorporated as a public company (PLC) rather than a private company (Ltd), as only a public company may, under CAMA, invite members of the public to subscribe for its shares, debentures, or other securities. CAMA covers the SPV’s capacity, conferring on every company broad statutory power to borrow, charge its property and undertaking, and issue debentures or other securities.10
Investments and Securities Act 2025 (ISA 2025): The ISA mandates that no securities may be sold or offered to the public without prior registration.11 In addition, the SEC Rules on Securitisation 2015 (“Securitisation Rules”) establish the legal and regulatory framework for securitisation in Nigeria, covering the pooling of assets, the issuance of asset-backed securities, the regulation of securitisation participants, and measures for investor protection. 12
The Securitisation Rules define “assets” for the purposes of asset-backed securities to mean loans receivable or other similar financial assets with an expected cash payment stream, including receivables, mortgage loans, other debt instruments, and receivables arising under non-financial contracts, such as service contracts.
While the definition is sufficiently broad to encompass a range of financial assets and contractual payment rights, it does not appear to extend to intellectual property, given that a trademark, patent or copyright is an intangible proprietary asset rather than a financial asset or debt obligation capable of generating an expected cash payment stream in its own right. However, the receivables generated from the commercial exploitation of intellectual property such as royalty payments, licensing fees or other contractual payment rights arising under intellectual property licence agreements may fall within the scope of "receivables under non-financial contracts", provided they can produce predictable and identifiable cash flows.
Instead, it is more readily capable of accommodating the securitisation of the income streams generated by intellectual property. This distinction is significant because, in practice, many IP-backed securitisations internationally are structured around royalty receivables and other contractual payment rights rather than the transfer of ownership of the intellectual property assets.
Opportunities for Consumer Brands
Nigerian consumer brands have a real opportunity to benefit from trademark securitisation, and the commercial case is well-supported by international practice. The most immediate benefit is the ability to raise money from the value sitting in a trademark portfolio without selling the business or giving away shares. In other words, IP securitisation allows brand owners to turn future intangible profits into immediate working capital without diluting equity or adding liabilities to the balance sheet, a particularly attractive proposition for the many family-owned and founder-led businesses that dominate Nigeria’s consumer goods sector.13
International practice illustrates the commercial case. Domino’s Pizza utilised a securitisation structure as early as 2007, with the transaction credited as a material factor in the brand’s subsequent decade of growth.14 Dunkin’ Brands raised USD 2.6 billion in 2015 by monetising royalty income from over 18,600 outlets across 56 countries, at the time the largest whole business securitisation on record.15 Other major consumer brands including Taco Bell, Wendy’s, and Subway have since executed similar transactions.16 While no comparable precedent exists in the Nigerian market, this model could apply to well-structured Nigerian consumer franchises with documented royalty streams and offers a viable avenue for unlocking trademark value in Nigeria.
Conversely, well-structured trademark securitisation transactions can increase a company’s appeal to private equity sponsors and institutional investors. By demonstrating that intangible assets can provide predictable, ring-fenced cash flows, such structures give investors greater insight into revenue sources and risk allocation.
Under a trademark securitisation structure, the company typically monetises expected future licensing revenues by selling the associated receivables or cash flow rights to a special purpose vehicle in exchange for an upfront payment. As a result, rather than waiting to receive royalty income over time, the company receives immediate cash, strengthening its liquidity and enhancing its ability to deploy capital for strategic or operational purposes.
The company receives immediate liquidity, while the SPV assumes the financing obligation. Consequently, the transaction may improve the company's financial ratios and potentially its credit rating by avoiding a corresponding debt obligation on its balance sheet.17
Challenges with Trademark Securitisation in Nigeria
While trademark securitisation presents a promising avenue for unlocking the value of intellectual property assets in Nigeria, its successful implementation is contingent upon addressing certain legal, regulatory, and commercial considerations, including:
- Valuation challenge: One of the fundamental challenges in trademark securitisation is valuation. The entire securitisation structure depends on the accuracy and credibility of the trademark valuation underpinning the securities being issued, yet Nigeria lacks a mature, standardised trademark (in fact, IP in general) valuation market with the comparable transaction data and professional benchmarks that investors and rating agencies require. Internationally, valuation has been identified as the principal difficulty in structuring IP securitisation transactions, given that IP cash flows can be highly volatile and unpredictable relative to tangible asset revenue streams.18 The absence of domestic precedent and professional valuation infrastructure compounds these difficulties in the Nigerian context, with direct consequences for the credit ratings achievable on any issued securities.
- Structural weakness of licensing arrangements: Compounding the valuation challenge is the structural weakness of licensing arrangements within many Nigerian consumer brand businesses. The quality of a securitisation’s cash flow is only as good as the licensing framework underlying it, and Nigeria currently has no dedicated franchise or licensing legislation, and franchising and brand licensing arrangements are instead governed by a patchwork of contract law, intellectual property law, and business registration regulations.19 In the absence of a bespoke regulatory framework mandating disclosure, documentation standards, or enforcement mechanisms, licensing arrangements are susceptible to inconsistencies and documentation gaps, particularly in franchise and distribution contexts. The resulting unpredictable cash flows directly constrain achievable credit ratings and undermine the commercial viability of trademark-backed securitisation transactions.
- Enforcement risk: Nigeria faces persistent trademark infringement and product counterfeiting, particularly in the consumer goods sector, and widespread infringement not only erodes the commercial value of the securitised marks but signals to investors that the revenue stream is inherently fragile.
- Registry Inefficiencies and Recordal Delays: The administrative inefficiencies of the Nigerian Trademarks Registry, characterised by processing backlogs and recordal delays, add operational complexity to any transaction requiring timely assignment registration.
- Absence of market precedent: There is no established market precedent for trademark-backed securities in Nigeria. The absence of benchmark transactions creates uncertainty in deal structuring, documentation, and pricing; investors will inevitably apply higher risk premiums to unfamiliar instruments, and traditional lenders and advisers may lack the expertise to assess and execute these transactions.
Addressing these challenges requires deliberate action, such as formalising licensing structures, investing in trademark enforcement, and building market literacy among both brand owners and institutional investors.20
Conclusion
Trademark securitisation is an underutilised but viable financing option for Nigerian consumer brands. The legal building blocks are already in place, the Trademarks Act permits the assignment of registered marks, the CAMA governs incorporation and operation of the SPV, and the ISA 2025 provides a workable framework for issuing securities to investors. The real gap is not so much legal; it is practical. Nigerian businesses must begin to see their trademarks not just as protection tools but as assets that can generate additional revenue.
To get there, the market needs better trademark valuation standards, stronger and better documented licensing arrangements, consistent enforcement against infringers, and clearer guidance from the SEC and the Trademarks Registry on how IP-backed transactions should be structured. Realising the potential of IP securitisation requires deliberate effort to build the right infrastructure. The brands that start building that infrastructure now, by cleaning up their trademark portfolios, formalising how they license their marks, and making the case for intangible asset value to investors, will be the ones best positioned to access this new source of capital as the market matures.
Footnotes
1 Dov Solomon and Miriam (Markowitz-)Bitton, ‘Intellectual Property Securitization’ (2015) 33(1) Cardozo Arts & Entertainment Law Journal 125 https://www.cardozoaelj.com/wp-content/uploads/2014/01/Solomon-Bitton-Final.pdf accessed April 6, 2026.
2 Andreas Jobst, ‘Back to basics, What Is Securitization – Finance & Development (2008) <www.https://www.imf.org/external/pubs/ft/fandd/2008/09/pd f/basics.pdf> accessed April 4, 2026.
3 Abigail Benjamin Kahuwai, ‘Securitisation of Intellectual Property Rights in Nigeria: Prospects and Challenges’ (2025) 7(2) International Journal of Law, Policy and Social Review 17-21 accessed April 5, 2026.
4 Ibid.
5 Section 26 (1) (2) and 67 Trademarks Act
6 Fred Onuobia, Similoluwa Oyelude, Japhet Eneh, and Oluwatosin Jinadu ‘Trade Marks Laws and Regulations: Nigeria’ in International Comparative Legal Guides (Global Legal Group 2025), <https://iclg.com/practice-areas/trade-marks-laws-and regulations/nigeria> accessed April 7, 2026.
8 Trademark Act of 1946 (Lanham Act), s. 10 (US).
9 Trade Marks Act 1994, s. 25(1), (3)(a), (4) (UK), as amended by the Intellectual Property (Enforcement, etc) Regulations 2006 (S.I. 2006/1028).
10 Section 191 CAMA.
11 Section I86(5) ISA 2025.
12 FMDQ Academy, Regulatory Framework for Securitisation (May 2024) https://fmdqacademy.com/wp content/uploads/2025/06/Regulatory-Framework-of-Securitisation_May-2024vFY2vIYvKLvJO.pdf accessed August 5, 2026.
13 Marc René Deschenaux, ‘Intellectual Property Direct Securitization: A New Paradigm in IP Finance’ (2025) <https://marc.deschenaux.com/articles/intellectual-property-direct-securitization-a-new-paradigm-in-ip-finance/> accessed April 4, 2026.
14 Jonathan Maze, ‘What on earth is a whole business securitization and why is it so popular?’ Restaurant Business Online (2024) <https://www.restaurantbusinessonline.com/financing/what-earth-whole-business-securitization-why-it-so popular> accessed June 21, 2026.
15 Corvid Partners, ‘Whole Business Securitization: Cash Flow Structure & Valuation’ <https://www.corvidpartners.com/field-guide/securitization/whole-business-securitization> accessed June 21, 2026.
16 Ibid.
17 Holland & Knight, ‘Alternative Financing Solutions: Intellectual Property-Backed Loans’ <https://www.hklaw.com/en/insights/publications/2020/09/alternative-financing-solutions-intellectual-property-backed loans> accessed April 4, 2026.
18 Marc René Deschenaux, ‘Intellectual Property Direct Securitization: A New Paradigm in IP Finance’ (2025) <https://marc.deschenaux.com/articles/intellectual-property-direct-securitization-a-new-paradigm-in-ip-finance/> accessed June 22, 2026.
19 G Elias, ‘Legal Landscapes: Nigeria-Franchise & Licensing’ Legal 500 Country Comparative Guides <https://www.legal500.com/guides/legal-landscapes/nigeria-franchise-licensing/> accessed June 22, 2026.
20 Kahuwai (n 3) 20.
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