Overview
Aon Advantage Funds LLC ("AAF") is a Delaware limited liability company that was
formed on May 14, 2020 and is headquartered in Chicago, Illinois. It is wholly owned by
Aon Risk Services Companies Inc., an indirect subsidiary of its ultimate parent, Aon plc
(“Aon”). Aon shares are listed on the New York Stock Exchange (symbol: AON).
AAF provides investment advice and management to private funds (each, a “Fund” and
collectively, the “Funds”). To date, these Funds have only been offered to U.S. and non-
U.S. institutional investors.
Currently, AAF serves as the investment adviser to Aon IP Advantage Fund LP (“Aon IP
Advantage Master Fund”), a Delaware limited partnership; Aon IP Advantage On-shore
Feeder Fund LP, a Delaware limited partnership (“Aon IP Advantage U.S. Feeder”); and
Aon IP Advantage Off-shore Feeder Fund LP, a Cayman Islands exempted limited
partnership (“Aon IP Advantage Cayman Feeder” and together with Aon IP U.S. Feeder
and Aon IP Master Fund, “Aon IP Advantage Fund”). Aon IP Advantage Fund is
organized in a “master-feeder” structure, where Aon IP Advantage U.S. Feeder and Aon
IP Advantage Cayman Feeder invest substantially all of their assets in Aon IP Advantage
Master Fund. The advisory fees received from Aon IP Advantage Fund are described in
its Confidential Private Placement Memorandum (“PPM”), limited partnership agreement
(“LPA”), and other governing documents. AAF also provides non-discretionary investment
advice to a sidecar vehicle (the “Sidecar Investment Vehicle”), a sidecar arrangement
offered to a strategic investor to co-invest in certain investments (each a “Fund” or
“Client”).
AAF manages the assets of each Fund in accordance with the terms set forth in the
governing documents applicable to such Fund. Investors and prospective investors in
the Funds should refer to the applicable Fund’s governing documents in conjunction with
this Brochure for complete information on each Fund’s investment objectives, restrictions,
and risks. Investors should consider whether a Fund meets their investment objectives
and risk tolerance prior to investing. There is no assurance that AAF will achieve any of
the Funds’ investment objectives.
AAF seeks to provide loans to growth companies through an asset-backed lending
strategy that seeks to secure the
loans with intellectual property (“IP”) and the remainder
of the company’s assets, as well as a pledge of cash flows, with conservative loan-to-
value ratios and generally durations of three to four years at the time of issuance (the “IP-
Backed Loan Strategy”). The IP-Backed Loan Strategy encompasses a comprehensive
investment process to originate, underwrite, and monitor IP-backed term loans, primarily
to growth-oriented borrowers in the U.S. market.
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IP-backed investments will primarily be structured as senior-secured term loans to seek
to protect Clients’ investments and confirm control if any restructuring process, asset sale,
capital raise or refinancing occurs or is necessary. AAF may originate loans with warrants,
other forms of equity compensation, or embedded investment leverage, but this is not its
primary strategy. The objective of this strategy will be to establish a market position of
providing IP-rich borrowers with non-dilutive debt capital to generate returns to Clients
that are not correlated with the broader public markets, by (a) capitalizing on supply and
demand imbalances in private debt markets around IP-rich growth companies, and (b)
maintaining downside protection with strong asset coverage.
Loans to companies based outside of the U.S. may also be made if consistent with the
Client’s investment strategy set forth in the governing documents. The IP-Backed Loan
Strategy is discussed, together with a description of its associated material risks, in more
detail in Item 8 of this Brochure and in the Fund governing documents for the relevant
Funds and in Client agreements, investment programs, investment policy statements,
and/or investment guidelines.
Each term loan that is part of AAF’s IP-Backed Loan Strategy will be structured as part of
an overall strategy seeking an attractive net internal rate of return (“IRR”) for investors on
a portfolio basis.
AAF also reserves the right to invest opportunistically when presented with the following
type of special situation opportunities: debtor-in-possession financings and rescue
financings; secondary opportunities and other non-customary opportunities. Each special
situation loan will seek to generate an attractive net IRR for investors.
As of the date of this Brochure, AAF had approximately $268,000,000 in regulatory assets
under management.