The City’s growing scepticism over the value of investments in song catalogues today led the London-listed Hipgnosis Songs Fund to sell $465million worth of music royalty rights after claiming its shares did not reflect the true value of its portfolio.
The Hipgnosis fund sold the rights to songs by artists including Shakira, the Kaiser Chiefs and Barry Manilow to an unlisted partnership between its parent company and private equity giant Blackstone. It will use the proceeds to pay down debts and buy back $180 million worth of shares.
Hipgnosis founder Merck Mercuriadis said the business had long felt “the true value of our iconic songs was not being reflected in our share price”, and that the sale would help correct that.
He said: “"Earlier this year we initiated consultations with shareholders, in contemplation of the continuation vote and our concerns that the true value of our iconic songs was not being reflected in our share price.
“It was clear that shareholders shared our belief in the continuing long-term opportunity of Hipgnosis Songs Fund and wished to see a significant share buy back programme and reduction of our leverage in order to deliver a re-rating in the share price.”
The songs being sold represent around 19% of the Hipgnosis portfolio, and mostly represent 21st century hits as the fund aims to focus more on older tunes.
It comes just days after fellow songs fund Round Hill was sold to an American group after its shares had slid since a 2021 IPO.
After Round Hill was sold, analysts at Jeffries noted that the Hipgnosis catalogue might be too big to make a sale viable.
Shares in the Hipgnosis fund were up 1.2p to 94.2p this morning, but are still down 24% over the last two years.