Hipgnosis Songs Fund is in search of a new auditor after PwC declined to reapply for the position. PwC, the company’s auditor since its establishment in 2018, indicated a non-participation stance in the tender process, expressing its desire to discontinue as Hipgnosis’ auditor.
This development compounds challenges for the company, which already faces uncertainties following shareholder rejection of a five-year mandate extension. Additionally, Hipgnosis, its founder Merck Mercuriadis, and its investment adviser are grappling with legal proceedings initiated by liquidators representing creditors of Hipgnosis Music Limited.
The claim alleges a “diversion of business opportunity” from HML to the Hipgnosis Songs Fund and contends that the fund “unlawfully assisted Mr. Mercuriadis with, or received, this alleged diversion.” All parties involved deny these claims and express their intent to vigorously defend against them.
Notably, Hipgnosis Songs Fund warns that it lacks insurance coverage for the costs associated with this legal challenge. The company, founded in 2018 with aspirations of making music rights a mainstream asset class, has faced challenges such as rising interest rates diminishing returns and increased discount rates affecting asset value calculations.
Plans to sell a substantial music rights portfolio to a Blackstone-owned fund were thwarted by investors last month. In response to these challenges, the company’s board is set to appoint independent advisers for due diligence on assets, a crucial step in exploring alternative proposals for the company’s future.
Hipgnosis Music Limited (HML), founded in 2015 and now being wound up, claims a diversion of business opportunity to the London-listed fund and investment adviser Hipgnosis Song Management.
The London-listed fund plans to appoint independent advisers for due diligence on its assets and seeks alternative terms for future investment advisory arrangements with HSM. Hipgnosis Music Limited and its liquidators have not yet commented on the matter.
