Private Equity Interview Question:

Define royalty fund?

Submitted by: Murtaza

An investment that purchases a consistent revenue stream deriving from the payment of royalties. One growing subset of this category is the healthcare royalty fund, in which a private equity fund manager purchases a royalty stream paid by a pharmaceutical company to a drug patent holder. The drug patent holder can be another company, an individual inventor or some sort of institution, such as a research university.
Submitted by: Murtaza