The fundraising is an example of private equity firms
capitalizing on investor appetite for so-called alternative
investments, such as wine and fine art, whose returns are, for
the most part, not tied to the performance of financial markets.
"I think it's fair to say what's going on with music has very
little to do with where the traditional markets are," Round Hill
Chief Executive Joshua Gruss said in a telephone interview.
Round Hill's investors include traditional private equity
investors such as insurance companies, endowments and family
offices.
Since launching in 2012, Round Hill has put to work roughly $250
million and generated more than $60 million in royalty income,
Gruss said.
The strategy is to acquire the publishing or recording rights to
music and then pick up royalties when songs are played publicly,
streamed online or covered by other performers.
One example is Chris Kenner's song 'Land of a Thousand Dances,'
which is featured in films such as "Forrest Gump."
"We only own half of it and it earns about $200,000 a year...
That is, I would say, a medium-sized song (revenue-wise)," Gruss
said.
Last week, Round Hill said it had acquired Carlin Music, one of
the largest of a few remaining independent music publishers in
the world, with a catalog of more than 100,000 songs, including
pop and rock classics such as 'Are You Lonesome Tonight',
'Fever' and 'La Bamba'.
The deal was for $245 million, according to a source familiar
with its terms who requested anonymity to discuss them.
Other similar private equity funds have launched in recent
years. Kobalt Capital Ltd said last November it had raised its
second fund to invest in music copyright, amassing $600 million
through $345 million of equity commitments plus debt.
(Reporting by Joshua Franklin in New York; Editing by Nick
Zieminski)
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