Hipgnosis Investors Urge Music Royalty Fund to Sell Some Songs to Boost Failing Stock Price
Hipgnosis Songs Fund (HSF), a music royalty investor known for buying back catalogs from the likes of Blondie and Shakira, is facing calls to sell some assets to boost a failing stock price.
Shares of the investment trust are down about 30 percent on the London Stock Exchange over the past year as rising interest rates have shed light on debt and refinancing.
HSF also saw artist deals dry up, and in May Rod Stewart turned down attempts to add it to its collection.
Some top investors believe the solution is to sell less attractive assets to revive the stock and buy back shares.
Tuned: Hipgnosis owns the rights to songs by artists like Neil Young, Chrissie Hynde and Brian Higgins, who has written for Kylie Minogue (pictured)
“The most important thing would be to divest less attractive catalogs in the portfolio and give shareholders a meaningful return,” said Solomon Nevins, portfolio manager at CCLA, a top-ten shareholder with a 4.9 percent stake.
“Where the stock is trading today, there has to be something in the portfolio that makes sense to sell, to buy back stock.”
Since it was launched five years ago by Merck Mercuriadis, a former Iron Maiden executive, and Chic frontman Nile Rodgers, a long list of famous musicians have sold it their songwriting rights for big windfalls.
They include Neil Young, the Red Hot Chili Peppers, Chrissie Hynde, Lindsey Buckingham of Fleetwood Mac, and Brian Higgins, who has written for Kylie Minogue and Girls Aloud.
It was reported that HSF was in talks with at least one bidder who could purchase some assets.
Mercuriadis said it would “do whatever it takes” to provide value to investors when asked in December if it would consider selling catalogs.
While the fund benefited from low interest rates at launch, rising interest rates have curbed momentum.
Its distressed share price means it can’t raise money to buy more catalogs without diluting existing shareholders.
HSF is owned by Hipgnosis Song Management, which is owned by US private equity giant Blackstone.
Hipgnosis Song Management also owns a separate fund, Hip Songs Capital, which has purchased the catalogs of singers such as Justin Bieber and Justin Timberlake.
HSF declined to comment and will today publish its financial results for the year ended March 31.
It hopes to capitalize on a continued rise of music streaming platforms.
In October, it announced a new debt financing package, with a £539 million revolving credit facility, running until the end of September 2027.