Stephen Otter
speaker
116 appearances
1 recordings
1 series
first heard Jun 2026
last heard 16 Jun
Stephen Otter’s voice in public audio — every appearance, attributed to the second.
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recordings per month · last 12 monthsRecordings per month over the last 12 months — 1 in all, peaking in Jun 2026 with 1.
Appearances
The beauty of royalties is typically what we're buying and investing in is long dated, but we try to get our cash back as quickly as possible to de-risk it.
But it means we also have an awful lot of longer term upside potential built into the structures that we put in place when we invest into the royalties.
Yeah, so it really depends where you're investing in the spectrum.
So we target the producing assets, the highest quality, the lowest volatility.
We're typically underwriting at the asset level to a low to mid-teens in the absence of an exit, so purely on a cash yield basis, which means we're then generating for our clients high single-digit, low double-digit returns purely predicated on the yield.
And I think that's important because if we don't have a single exit in the next 5, 10, 15, 20 years,
we still expect to be able to deliver the target return to our clients.
And actually what we've seen over the last 12 months is we've exited three royalties for IRRs materially above that, so closer to the 40% IRRs.
So we do have the outperformance potential, but we really kind of focus on the steady day-to-day yield, which we think is more predictable and less reliant on than predicating on exits.
Yeah, it's an interesting one because we try to triangulate all of the investments we make to have the same relative value across the sectors.
And so we're trying to price the same risk to roughly the same return across them.
And actually, a lot of what we've been doing in the entertainment space has actually been lending against the IP.
So we have less upside potential because we're not actually owning the royalties.
We're actually lending to the owner of the royalties themselves.
But it means we have a lot less downside volatility in it, i.e.,
if the underwriting is off by 10, 20, 30%, because we're lending with a huge equity buffer below us, we still end up in a relatively comfortable position to generating that low to mid-teens return.
But it does mean that we have less upside potential because obviously as a lender, we have a kicker, but it's not what's driving the returns.
On the pharma and the energy side of things, because there we're more the buyers of the royalties, I would say we have more alpha potential in them.
So to give an example, we own a royalty on a product which we think will replace the EpiPen for severe allergic reactions.
So if you eat a peanut, you have to inject yourself.
Showing 81–100 of 116 · page 5 of 6
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