(Yicai Global) Dec. 27 -- Ping An Securities, the brokerage under China's largest insurer by market cap Ping An Insurance Group, issued its first intellectual property-backed security product on the Shenzhen Stock Exchange yesterday, Shanghai Securities News reported.

The IP rights of some 15 private companies have been added to the asset-backed security with a value of CNY124 million (USD17.8 million), the report said. The firms have pledged future cash flows from existing IP assets or rights to the IP itself in order to secure financing at a 5 percent interest rate.

Most asset-backed securities use physical assets such as equipment or real estate as guarantees against loans. However, many small and medium-sized sci-tech firms don't have these kinds of hard resources, but instead own valuable IP. Leveraging that as collateral is an emerging option.

Issued by the microloan unit of Shenzhen High-Tech Investment Group, the IP ABS is backed by SZHTI's credit financing guarantee arm, an executive in charge of Hong Kong-based Ping An Securities' investment banking division said. In this way risks are reduced and fundraising costs are lowered, he added.

Founded in May 2014, SZHTI's microloan unit is a financing platform set up by the city to meet micro, small and mid-sized firms' demand for small and short-term funding.

Editor: Kim Taylor