Most Innovative Deal of the Year – Goldman Sachs, Vanderbilt University Trademark Royalty Securitization
GlobalCapital took pitches for several contenders for the most innovative securitization deal of the year. All of them were impressive — whether using securitization to finance improvements to public infrastructure, convert a fleet of passenger planes into cargo aircraft, or pooling renewable energy credits to promote the development of residential rooftop solar energy.
Fulfilling socially responsible investing or environmental, social and governance goals was of particular interest to us for this year’s awards, and our choice for the most innovative securitization deal of the year was an excellent example of how securitization can be used for public benefit.
Goldman Sachs won this award for its securitization of trademark royalties on behalf of Vanderbilt University.
The deal monetised 30 years of royalty payments made to Vanderbilt by Vanderbilt University Medical Center in exchange for the rights to use the university’s name. It resulted in the largest single addition to any university endowment system ever, increasing the size of Vanderbilt’s endowment by 30%. The ESG component was in the use of proceeds — the deal allowed Vanderbilt to fund a tuition assistance programme for its students. Given the rising debt burden for US university graduates and the prohibitive cost of attending college for some, this component of the transaction was particularly praiseworthy.
On a technical level the deal was also impressive. It was the largest private placement in 2018 and was oversubscribed 1.35 times. The 30 year deal was broken up into a $1.458bn senior tranche and a $7.452m equity component. Vanderbilt retained enforcement rights and the monetisation does not consolidate onto the school’s balance sheet.
Overall, the innovative use of capital markets financing to monetise a steady and long term cash flow, along with the ESG component of the deal, made it a clear winner in the category this year.