MBW’s Stat Of The Week is a series in which we highlight a data point that deserves the attention of the global music industry. Stat Of the Week is supported by Cinq Music Group, a technology-driven record label, distribution, and rights management company.
Few could argue against the fact that when Merck Mercuriadis floated Hipgnosis Songs Fund on the London Stock Exchange in summer 2018, it changed the face of the music business.
That IPO saw Mercuriadis raise over £200m (approx $265m) via share issues before Hipgnosis started trading on the LSE. That money set Mercuriadis and Hipgnosis on their way to becoming the most frequently acquisitive company in the modern industry.
Although Hipgnosis’s blistering growth since then has recently attracted one or two skeptics in the financial world, its early investors will be happy bunnies: Since that flotation in June 2018, the company’s share price (to January 15, 2021) has increased by over 16%… despite the small matter of a global pandemic.
Now, Music Business Worldwide can reveal that another music industry figure is plotting a major flotation of a new rights company. It’s happening in the US, and is borrowing a few of the hallmarks of Hipgnosis’s story.
Neil Jacobson was the long-time President of Geffen Records in Los Angeles, before exiting the UMG label in 2019 and establishing his own songwriter/producer management firm.
That firm, now known as Hallwood Media, has been at the forefront of some notable rights acquisitions stories over the past two years. One such story saw Hallwood client Jeff Bhasker – producer to Kanye West and others – sell his producer points and his music catalog. (Bhasker’s producer royalties and the writer’s share of his publishing catalog went to Hipgnosis in 2019; Jacobson recently confirmed to Rolling Stone that he also struck an earlier deal that saw Morgan Stanley acquire a basket of Bhasker’s rights for a rumored $60-plus million.)
MBW has now obtained a SPAC S-1 prospectus for Jacobson’s new company – The Music Acquisition Corporation – which explains how the exec is planning to raise $200 million (potentially up to $230 million, depending on demand) via an imminent IPO on the New York Stock Exchange.
In the US, a SPAC (Special Purpose Acquisition Company) is an entity formed to raise capital via an IPO which plans to use the proceeds to buy unspecified businesses/assets after the flotation.
In other words, if Jacobson pulls it off, it will net him and his team a nine-figure sum to go shopping… and they want to go shopping in the music business.
Book-runners for the prospective IPO have been named as Citigroup and Cantor Fitzgerald.
MBW’s Stat Of The Week: Ex-Geffen President, Neil Jacobson, is raising $200 million via the issue of 20,000,000 units for $10 apiece in The Music Acquisition Corporation. Each unit will consist of one share of Class A common stock – plus one-half of one redeemable warrant.
What’s The Music Acquisition Corporation going to spend this loot on? Music copyrights? Almost definitely – but this isn’t just a Hipgnosis copycat.
The S-1 filing explains that the firm has highlighted four separate schools of acquisition target, with all of sitting betwixt the crossroads of music and tech.
The prospectus – which you can read in full through here – breaks these target areas down as follows:
- Audio Content: “We plan to explore potential target companies serving content creators, IP owners and consumers by unlocking new opportunities for content discovery and monetization. Our depth and breadth of relationships across the entire audio industry, including recorded music labels and music publishers, streaming platforms, podcasting platforms, voice platforms, agencies and other emerging platforms, position us to uniquely source and evaluate opportunities for potential targets in this sector.”
- Technology: “The dramatic advancements in the music industry are largely driven by pioneering technology companies… Select verticals of interest include royalty free sample libraries (for production music), music catalog analysis and organization tools, data science and trend research companies, blockchain and other AI-driven platforms.”
- Social: “Platforms such as TikTok and Triller have provided new life to music, while their survival symbiotically depends on that of the music industry… We can offer a unique value-add to companies including but not limited to social media networking apps, social content platforms and online video sharing platforms.”
- Consumer: “Brands that have been able to adapt and adopt music as a key driver, both in consumer experience and partnerships, have found significant success in recent years. Examples include Beats by Dre and Peloton. We believe we can provide immediate value to any consumer-facing company with proprietary access to top-level music and artists, resources and connections within the industry and an ability to navigate, contact and execute music licenses.”
With Jacobson as CEO and Chairman of The Music Acquisition Corporation, the SPAC’s leadership also includes ex-Lehman Brothers and Barclays Capital veteran Todd Lowen as COO.
In addition to Jacobson and Lowen, The Music Acquisition Corporation’s Directors are named as Michael Levitt, Ben Silverman and Tunde Balogun.
Levitt has been the Chief Executive Officer of Kayne Anderson Capital Advisors since July 2016. Silverman is an entrepreneur and movie/TV producer who has served as the Chairman and Co-Chief Executive Officer of Propagate Content since 2016.
Balogun will be best known in music industry circles. He is President and co-founder of LVRN, the US-based record label, music publishing, and artist management company whose signings include artists such as 6lack, Summer Walker, and Dram.
The Music Acquisition Corporation prospectus reads: “The music industry is highly fragmented with hundreds of content owners and creators, publishing and distribution platforms and other companies providing enabling technologies and services to other industry participants and consumers, many of which are privately owned. We believe that the experience and capabilities of our management team will make us an attractive partner to potential target businesses, enhance our ability to complete a successful business combination, and bring value to the target post-business combination.
“We believe that our management team’s extensive experience acquiring, operating and growing businesses in the music sector, coupled with their vast network of leading industry executives, entrepreneurs, investors and deal makers, will provide access to attractive business combination opportunities and position us to succeed in consummating an initial business combination.”
It reveals that the company intends to float on the NYSE under the ticker TMAC.U.
“We expect that our units will be listed on the NYSE on or promptly after the date of this prospectus,” it reads.
The prospectus is dated January 15, 2021.
