DThe publicly traded fund Hipgnosis Songs (HSF) has announced the sale of 29 catalogs of rights to the private fund Hipgnosis Songs Capital (HSC), which is financed by the investment company Blackstone. According to a statement on Thursday, the sale is expected to generate $440 million. The proceeds will be used for various purposes, including a stock buyback program (up to $180 million) and debt servicing ($250 million). The goal is to boost the HSF stock price.
The market value of the fund recently was approximately 50 percent lower than the valuation of the held rights. However, last Friday, the stock increased by more than 10 percent due to a takeover offer worth around $470 million for the competing fund Round Hill Music Royalty. On Thursday afternoon, the HSF stock was trading around 4 percent lower.
HSC wird wie auch der börsennotierte HSF vom Unternehmen Hipgnosis Song Management unter der Leitung des ehemaligen Künstlermanagers Merck Mercuriadis verwaltet. Im Oktober 2021 hatte Blackstone den eine Milliarde Dollar schweren Fonds HSC aufgelegt und sich zudem an der Managementgesellschaft beteiligt. Laut „Financial Times“ hält die Blackstone die Mehrheit der Anteile.
Among the catalogs that are to be transferred, mostly shares of relatively younger songs are included – including those of the band Kaiser Chiefs, Nelly, or the artist Shakira. According to the information, the price is 26 percent higher than the one at which the package was originally purchased. However, it is 17.5 percent lower than the valuation of the rights package at the end of March this year.
Hipgnosis als Vorreiter
Alternative offers can be submitted within the next 40 days, which means that the package could potentially be sold to another buyer who may offer more than the HSC fund. After the deal is completed, HSF will still hold 81 percent of the current portfolio based on the current valuation. Additionally, it was mentioned that another catalog, acquired in 2020 as part of the acquisition of a package from a fund of the British company Kobalt, will be sold for $25 million to an undisclosed buyer. As part of the acquisition, Hipgnosis also acquired shares of Mariah Carey’s hit „All I Want For Christmas Is You,“ which will not be sold in this announced sale. However, rights that do not align with the core business and involve additional administrative duties may be sold.
Der Fonds Hipgnosis Songs wurde 2018 von Mercuriadis gegründet und gehörte lange zu den umtriebigsten Playern auf dem Markt für Musikrechte. Der Fonds erwarb Rechteanteile am Schaffen von diversen bekannten Künstlern wie beispielsweise Neil Young, Blondie oder Lindsey Buckingham.
Dylan, Springsteen und Co verkauften
In recent years, many other artists have sold shares of their work for high three-figure million sums, including Bob Dylan, Neil Diamond, Sting, Tina Turner, as well as younger ones like the band Imagine Dragons, David Guetta, or John Legend. According to reports, up to $550 million was paid by Sony Music for Bruce Springsteen’s recordings and publishing rights in late 2021, with parts of the publishing rights being paid by Eldridge Industries – the most expensive known sale of an individual artist to date.
Neben Blackstone hatten auf der Suche nach aussichtsreichen Anlagegelegenheiten in einem Niedrigzinsumfeld auch diverse andere Finanzinvestoren in Musikrechte investiert. Darunter waren etwa KKR (alleine und über eine Partnerschaft mit der Bertelsmann-Musiksparte BMG), Pimco, Blackrock oder Apollo Global Management. Die steigenden Zinsen und die makroökonomisch schwierigere Lage, auf die auch Mercuriadis am Donnerstag verwies, hatten den Markt allerdings etwas abgekühlt, da nicht zuletzt die Kosten für das Begleichen von Schulden gestiegen waren. Auch HSF und dessen Kurs waren in diesem Zuge unter Druck geraten.
In the past months, there have been no acquisitions in favor of the publicly traded fund. However, Mercuriadis remained active with the Blackstone fund. He acquired rights to lyrics and compositions of songs co-written by Justin Timberlake, a portion of the author’s rights of Leonard Cohen, and reportedly purchased a comprehensive rights package from Justin Bieber earlier this year for over $200 million.
Warum es immer noch eine Nachfrage nach Katalogen gibt
Catalogs of popular artists remain attractive due to the prospect of regular and well-planned income, such as from streaming. Moreover, the market for music recordings continues to grow, and revenue can be further increased through additional marketing, such as selling physical media or placing works in films, series, advertisements, or video games. However, this requires the necessary expertise.
There is still a lot of activity in the market. Additional financial investors have joined, some with different sources of funding and increased expertise – the game is actually just beginning, said former BMG CEO Hartwig Masuch to F.A.Z. in May. Music companies like the Bertelsmann division, which makes frequent acquisitions and recently acquired shares in Paul Simon’s rights in June, as well as the industry’s big three, Universal, Sony, and Warner Music, naturally also belong to the buyers of catalogs.
There are still numerous big names that could potentially sell their rights: While a possible rights sale by Pink Floyd was briefly considered a new record deal, it ultimately failed due to disagreements between Roger Waters and David Gilmour. Recently, there have been rumors about a sale of the recording and author rights of Queen.