The Financial Times reports that Hipgnosis Songs Fund, the London-listed trust run by Merck Mercuriadis that has bought song catalogues from artists such as Blondie and Neil Young, has launched a debt-funded share buyback programme after its stock fell 30 per cent in six weeks.
The fund, which has caused a wave of catalogue acquisitions over the last two years, made the move after the tumbling share price left its market value at half of what Hipgnosis had said its music catalogues were worth.
Already backed by private equity company Blackstone, Hipgnosis will finance the share buybacks using new debt from a refinancing at the beginning of this month. The company would not disclose how many shares it intends to buy according to the Financial Times.
Hipgnosis Songs Fund has raised £1.052 billion to fund acquisitions since it was established in 2018 and within their current portfolio are top acts and producers like 50 cent, Timbaland, Rick James, RZA, LA Ried, Pusha T, Neil Young, and Red Hot Chilli Peppers.
Mercuriadis has been preaching the gospel to investors saying “songs are better that oil and gold” even since he listed the Hipgnosis Songs Fund on the London Stock Exchange in 2018. However as soon as Hipgnosis raise new money, they buy more catalogues at head turning prices.
Shaggy had explained to WMV that the main reason catalogues were being acquired at astronomical prices was largely due to the interests rates being low up to two years ago.
As interest rates rise and Hipgnosis comes under pressure to monetize their existing catalogue even as they slow down purchases of new ones.
One analyst at investment bank Stifel told FT that “This is a surprising announcement to us,” regarding Hipgnosis share but back announcement. “Effectively the fund will be borrowing at just under 6 per cent to buy back stock . . . the market is essentially indicating a lack of credibility over valuations.”
Shares were up 7 per cent on Friday following the announcement but the previous weeks of falling share price has left Hipgnosis Songs Fund effectively unable to raise new equity with which to buy more song catalogues, because doing so would dilute existing shareholders.
The Church Of England Fund Managers is one of the largest shareholders of Hipgnosis Ms they own songs from Dua Lipa, Khalid and U.K. Singer Harry Styles who has been at the top of the Billboard chart over the last six months.
Blackstone bought a majority stake in Hipgnosis Song Management, which advises Hipgnosis Songs Fund. Blackstone also has a separate $1bn fund, Hipgnosis Songs Capital, which is privately held and advised by HSM.
All over America and Europe, legendary musicians and rights holders like Neil Diamond, Neil Young, Sting, Bruce Springsteen, Paul Simon, Stevie Nicks, and Justin Timberlake have sold or are in the process of selling their life’s work for eye-popping sums of money: The James Brown Estate reportedly walked away with $90 million from Primary Wave after a fifteen year contentious internal battle. Primary Wave Music is a New York company that specializes in marketing estates and song catalogs, bought the assets of the Brown estate, including music rights, real estate and the control over Brown’s name and likeness.
In Hip Hop younger musicians and rappers like Lil Wayne cashed out his entire Young Money catalogue including Drake and Nicki Minaj for $100 million to Universal Music Group.
Future recently sold his publishing in a deal said to be worth $65 million to Influence Media Partners. The sale includes 612 titles from 2004 to 2020.
Universal Music Group also dropped a cool $300 Million in the same period to purchase the entire songwriting catalog of Bob Dillon in one of the biggest acquisitions ever of a single act’s publishing rights, per New York Times.
BBC reported that Tina Turner sold the rights to her music catalogue for $50 million dollars, including hits like The Best and Nutbush City Limits, to music publishing company BMG. Billboard Magazine reported in January that Columbian Superstar Shakira had sold 100% of her music publishing rights to the Merck Mercuriadis owned Hipgnosis Songs Fund.
