Music investor Hipgnosis Songs Fund (SONG.L) will sell some of its catalogues, including songs by pop star Shakira and rapper Nelly, for $465 million to a private Blackstone vehicle to fund a share buy-back, pay down debt and bolster its stock price, the UK company said on Thursday.
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 (BX.N), 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 (.FTMC) 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 (RHM.L) for about $468.8 million.
