United Kingdom

Hipgnosis plans another equity raise to expand its catalogue

Music rights investment fund Hipgnosis has announced its intentions to undertake another equity raise as it targets £1billion worth of acquisitions.

The group, co-founded by a former manager of Elton John, has already invested almost £1.2billion in procuring over 110 catalogues that include songs from artists such as Fleetwood Mac, Blondie and the Kaiser Chiefs.

Many of those catalogues were purchased in the period covering its latest half-year results, which were published today showing its revenues almost doubling from £22.6million to £44.8billion in the six months to the end of September.

Hipgnosis acquired the Fleetwood Mac song Go Your Own Way (Left to right, band members Mick Fleetwood, Christine McVie, Stevie Nicks, Lindsey Buckingham and John McVie) 

It raised £426million from two placings in July and September and obtained dozens of new catalogues taking the number of songs it owns or co-owns to just under 58,000. 

They include classic rock tunes such as Fleetwood Mac's Go Your Own Way, Blondie's Heart of Glass, Rick James's Super Freak and 10CC's I'm Not in Love. 

Over 2,800 of its songs have been number one hits on global charts, more than 10,600 have held top ten positions, and 119 have been Grammy Award winners. 

Pre-tax profits remained relatively stable at £10.25million as the rise in people listening to streaming services such as Spotify helped grow its royalty income

Pre-tax profits remained relatively stable at £10.25million as the rise in people listening to streaming services like Spotify helped grow its royalty income.

'Whilst the ongoing Covid-19 pandemic has shaken up the entire music industry, streaming continues to dominate and is more than making up for the revenues lost from other income sources,' the Guernsey-based company wrote.

One of their biggest purchases was for Big Deal Music Group, who have now changed their name to Hipgnosis Music Group. Their portfolio comprised songs from artists like Born Slippy writers Underworld, St Vincent and the late jazz and blues musician Les Paul.

After years of working with platinum-selling musicians like Iron Maiden, Canadian-born Merck Mercuriadis (right) co-founded Hipgnosis with songwriter Nile Rodgers of Chic (left)

Since then, it has also bought Kobalt Fund 1, which holds over 33,000 songs such as Mariah Carey's festive anthem 'All I Want for Christmas is You,' in an acquisition worth £249million. It was the largest takeover in the music publishing sector in three years.

Hipgnosis's founder Merck Mercuriadis said: '2020 has been a year that the world never contemplated, as both society and the economy have been devastated by the pandemic.'

He added: 'We've been one of the FTSE 250's biggest yielders and have now reached a £1.25 billion market cap. The case for proven songs as the best uncorrelated asset class gets stronger every day. We have an incredible pipeline and are very excited for 2021.'

Morrissey and Elton John are among the artists that Mark Mercuriadis has managed in the past

The Canadian-born music industry executive started the investment company with Chic's Nile Rodgers after years of managing a vast roster of platinum-selling bands and solo artists like Guns 'n' Roses, Iron Maiden, Beyonce, and Morrissey.

His fund co-owns four of the Top Five Billboard Songs of the 2010s: Mark Ronson's Uptown Funk, Ed Sheeran's Shape of You, Closer by electronic duo The Chainsmokers, and Maroon 5's Girls Like You.

The group's financial success is partly predicated on the belief that earnings from songs will remain strong because people will always want to listen to music regardless of broader economic circumstances.

Kaiser Chiefs, fronted by Ricky Wilson (above), sold the rights to their first four albums to Hipgnosis last year. Those albums included their hits I Predict a Riot and Ruby 

'While we would not have wished for a pandemic to demonstrate this, it has indeed done exactly that, and that has been reflected in our strong performance,' Mercuriadis added.

Hipgnosis often buys royalty rights directly from artists. In August, they bought all of Barry Manilow's worldwide recording royalties as well as the 197-song catalogue of new wave band Blondie. 

Last year, Leeds-based rock group Kaiser Chiefs also sold the rights to their first four albums, along with their greatest hits and live albums, which include their popular singles Ruby and I Predict a Riot.

Shares in the group fell 1.42 per cent by the late morning to 121.75p. 

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