Hipgnosis Songs Fund now co-owns a run of the world’s biggest hits from the past decade, it’s confirmed – including Mark Ronson’s Uptown Funk and Ed Sheeran’s Shape Of You.
The UK-based vehicle, led by Merck Mercuriadis, has just released its interim report for the six months to end of September, which reveals that this month (December) it has acquired a 100% share of catalogs from both Shape Of You co-writer Johnny McDaid (covering 164 songs) and super-producer Jeff Bhasker (436 songs). That’s in addition to a 99% share of a catalog of 188 songs from Jack Antonoff – the Taylor Swift, Sara Bareilles and Lorde collaborator (and member of Fun.).
The interim report doesn’t specify whether these catalogs comprise publisher share, writer’s share or both – look out for more confirmed details from Hipgnosis, now the deals are done, in the coming weeks. (MBW reported yesterday that the publisher share of Jeff Bhasker’s catalog had been acquired by Warner-affiliated, Providence-backed $650m fund Tempo. We understand that Hipgnosis has now acquired the writer’s share of Bhasker’s works, in addition to his producer royalties.)
Shape Of You is the most streamed song in the history of Spotify, with over 2.3bn plays.Uptown Funk, by Mark Ronson feat Bruno Mars, has over a billion plays on the service, and over 3.7bn views on YouTube.
Hipgnosis’ interim report, published today (December 11), also confirms that the company has recently acquired a 100% share of a pair of catalogs from two top producers – covering 1,855 songs worked on by Brendan O’Brien, and also 122 songs on which Emile Haynie is credited.
O’Brien has been behind the desk for hit albums from artists such as Red Hot Chili Peppers, Bruce Springsteen, Neil Young and The Killers during his career, while Haynie is best known for working with artists like Eminem, Lana Del Rey, Kanye West and Bruno Mars.
Indeed, Hipgnosis boasts in its report that its now co-owns five of Billboard‘s ‘Top 10 Songs of the Decade’:
Uptown Funk, performed by Mark Ronson feat. Bruno Mars (co-written and co-produced by Jeff Bhasker, No.1)
Shape Of You, performed by Ed Sheeran (co-written by Johnny McDaid, No.3)
Closer, performed by The Chainsmokers feat Halsey (co-written and produced by The Chainsmokers, whose catalog Hipgnosis acquired in August, No.4)
Girls Like You, performed by Maroon 5 feat Cardi B (co-written by Starrah, whose catalog Hipgnosis acquired in April, No.5)
Despacito (Remix), performed by Luis Fonsi and Daddy Yankee feat Justin Bieber (co-written by Poo Bear, whose catalog Hipgnosis acquired in November last year, No.9)
Hipgnosis’ interim report also contains plenty of interesting financial tidbits.
It reveals that, as of September 30, the company had spent approximately £319.4m (around $420m) on 27 catalogs, which were purchased on “a blended acquisition multiple of 12.84 X historical annual net income”.
From that point to yesterday (December 10), says Hipgnosis, it spent a further £186.1 (approx $245m) on 15 more catalogs, taking its total portfolio to 42 catalogs – and 11,225 songs.
According to Hipgnosis, that adds up to an overall M&A expenditure – since launching by going public less than 18 months ago – of £505.6m, or approximately $665m.
“With over £1 billion in our investment pipeline, the songs and catalogs we are acquiring over the next days, weeks and months are just as impressive as what we have put together in our first 16 months and will also skew the vintage of the overall portfolio older.”
Merck Mercuriadis, Hipgnosis
Hipgnosis says that the “blended acquisition multiple” across its entire catalog of 11,225 songs was “12.99 X historical annual net income”.
And, no surprise, there’s more to come.
Hipgnosis’ report adds: “Our Investment Adviser, The Family (Music) Limited, is currently in advanced stage discussions on an investment pipeline of over £1 billion.”
And, according to Mercuriadis: “With over £1 billion in our investment pipeline, the songs and catalogs we are acquiring over the next days, weeks and months are just as impressive as what we have put together in our first 16 months and will also skew the vintage of the overall portfolio older.”
Watch this space.
Hipgnosis’ total revenue in the six months to end of September increased to £22.6m (approx $30m), which the company said was “ahead of management expectations”.
The firm also said adjusted operating profit for the period before tax increased to £14.1m ($18.6m).
In other news, the company has made two important recent appointments: Paul Burger was appointed as Senior Independent Director of the fund on September 9, while Sylvia Coleman was appointed as an independent Non-Executive Director with effect from 21 November.
Hipgnosis further confirms in its report: “In August 2019, the Company negotiated a £65 million Revolving Credit Facility with JP Morgan Chase Bank, N.A., with an option to increase this to £100 million, subject to certain conditions and commitments from willing lenders.
“The facility, which is available for three years, will provide Hipgnosis with increased flexibility to fund investments and working capital going forward. At period end £13.75 million was drawn on this facility which has since been repaid. The Revolving Credit Facility is at present unutilised.”
Addressing investors in the interim document, Merck Mercuriadis writes: “One step at a time, we are amassing the leverage and the support necessary to bring positive change to where the songwriter sits in the economic equation. The songwriter is more responsible than anyone for the success of an artist and the music industry in 2019 and they and their songs must be properly recognized.
“Important steps have been taken by the Copyright Board and with the Music Modernisation Act to acknowledge this but this is just the tip of the iceberg. We will use our leverage and support to positively impact where the songwriter sits which is not only important for the creative community but is in total alignment with the best interest of our investors.
“We would like to thank all our Shareholders for supporting our thesis that songs are a new highly investible asset class and we look forward to updating them as we acquire some of the greatest songs of our time in the coming months.”
“With investors needing uncorrelated assets more than ever, and proven Songs producing reliable and predictable income, the new asset class of proven Songs is, in our view, now more investible than gold and oil.
“With over £1 billion in our investment pipeline, the Songs and Catalogues we are acquiring over the next days, weeks and months are just as impressive as what we have put together in our first 16 months and will also skew the vintage of the overall portfolio older.
“We would like to thank all our Shareholders for supporting our thesis that songs are a new highly investible asset class and we look forward to updating them as we acquire some of the greatest songs of our time in the coming months. Equally well we would like to thank all of the incredible songwriters for entrusting us as custodians of these great songs which are not only the currency of the music industry but such a special and important part of everyone’s life.”Music Business Worldwide
