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The
sale includes a portfolio of 29 music catalogues and a
collection of non-core songs to a partnership between its
investment adviser and funds advised by U.S. private equity
group Blackstone, Hipgnosis said on Thursday.
Shares in the firm, which also owns rights to songs by the Red
Hot Chilli Peppers, Neil Young, and Blondie, climbed as much as
6.5% to a near one-year high of 99 pence in morning trade.
The company said in July along with annual results that it was
considering a “strategic sale of catalogues of songs” as it
seeks to narrow a sizeable share price discount to its net asset
value.
Founder Merck Mercuriadis is the CEO and founder of the
investment adviser, Hipgnosis Song Management (HSM), and holds a
minority interest in the buyer, Hipgnosis Songs Capital.
In 2021, Blackstone Inc agreed to deploy around $1 billion in
partnership with HSM to buy music rights and record songs at a
time online streaming was gaining popularity and becomes more
lucrative.
Hipgnosis said proceeds from the sale will be used among other
things for an up to $180 million share buy back programme and
repayment of a $250 million revolving credit facility.
"The board and the investment adviser believe that, over the
last 18 months, the company's share price has not reflected the
fundamental value of the company," the song investor said in a
statement.
Shares in the FTSE midcap firm had plunged about 31% in 2022,
but had eked out gains in the first two quarters this year for a
year-to-date growth of about 9% including Thursday's trading.
The sale of the first portfolio, worth $440 million, has a
"go-shop" provision, meaning the board is entitled to solicit
alternative offers for a period of 40 days from its
announcement.
The 29 catalogues accounted for 19% of the company's portfolio
by value as of March 31.
Hipgnosis Songs Fund will retain ownership of seven of its ten
largest catalogues, it added.
Last week, Alchemy Copyrights agreed to buy music copyright-focussed
investment firm Round Hill Music Royalty Fund for about $468.8
million.
(Reporting by Aby Jose Koilparambil and Yadarisa Shabong in
Bengaluru; Editing by Janane Venkatraman and Elaine Hardcastle)
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