Hipgnosis Song Fund (HSF), whose business hinges on owning music rights and collecting music royalties, is having to sell some of its song catalogues to bolster its bottom line.
HSF, a five-year-old fund based in the UK, is selling 29 song catalogues, including those of the singer Shakira, the rapper Nelly, and the Canadian record producer Bob Rock, for $440 million. The buyer is Hipgnosis Songs Capital, a sister fund owned and run by the asset manager Blackstone. HSF is also selling a collection of non-core songs for $25 million to another buyer, it announced yesterday (Sep. 14).
With the sale income, HSF plans to fund a share buyback program and reduce debt, all to boost its stock price, which HSF believes doesn’t reflect the “fundamental value” of the company.
Hipgnosis had already teased a “strategic sale of catalogues of songs” in July to shore up its stock.
By the digits: Hipgnosis’ stock-rescue sale
$465 million: The total money Hipgnosis expects to earn from its sale of song assets
$180 million: The cost of HSF’s share buyback program, to raise its stock price
$250 million: HSF’s repayment obligations, under the company’s revolving credit facility (RCF)
81%: The share of its existing portfolio that HSF will continue to retain
47: The number of songs in Rolling Stone’s 500 Greatest Songs of All Time that HSF will retain after the sale, down from the current 52 in the pre-sale portfolio
44%: The total return HSF’s sale will realise for shareholders. The deal gives “clear transactional evidence…of the current realisable value of the company’s catalogues,” according to Merck Mercuriadis, HSF’s founder-CEO.
40: The number of days other interested parties have under the go-shop clause to come up with a better proposal. But they’ll have to pay a $6.6 million termination fee to HSF.
$1 billion: The sum of money that Blackstone agreed to deploy in 2021, in partnership with Hipgnosis, to buy music rights
Company of interest: Round Hill Music Royalty Fund
Earlier this month, Round Hill Music Royalty Fund, a private equity firm focused, like HSF, on investments in music copyright assets, agreed to a cash takeover offer with Los Angeles-based Alchemy Copyrights.
Charted: Hipgnosis stock jumped on Round Hill news
One more thing: Will HSF be liquidated?
A crucial shareholder vote in October will compel investors to decide whether to liquidate the fund or back it for another five years.
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