Confirmed: Kobalt sells catalog to new KKR venture, Chord, for $1.1 billion

We told you so!

Kobalt Capital has today (October 19) confirmed that investment giant KKR has acquired the KMR Music Royalties II portfolio for approximately $1.1 billion.

KKR is teaming with co-investment partner Dundee Partners – the investment office of the Hendel family – to acquire the catalog, which contains over 62,000 copyrights across multiple genres.

The transaction has been completed by Chord Music Partners, a platform established by KKR with Dundee Partners.

KKR says it will also house other music assets it has purchased over the past year within Chord; these assets likely include the bundle of rights that KKR acquired from songwriter Ryan Tedder in January.

Music strategy firm mtheory was instrumental in the development of Chord.

Kobalt Music Publishing will continue to administer and service the works in Fund II under a multi-year agreement.

KMR Music Royalties II owns copyrights developed by SONGS Music Publishing – including hits by The Weeknd and Lorde – which Kobalt Capital’s managed fund acquired in late 2017 for around $160 million.

“We are thrilled to purchase this diverse collection of iconic songs. We look forward to investing in the success of this music and working collaboratively with Kobalt and the artists and songwriters who created it,” said Jenny Box, Partner at KKR.

“This transaction positions us with significant scale, which we will continue to grow by providing flexible, creative capital to music rights owners. Across KKR, we are investing in innovative technology, media and entertainment businesses that are connecting fans to music in new ways and we are excited about how this can enhance the value and reach of these songs.”

Kobalt Capital Chief Investment Officer and Kobalt Founder & Chairman Willard Ahdritz said: “When we launched Kobalt Capital in 2011, we wanted to work with music we loved and would continue to live on for many decades to come. Our announcement today acknowledges this focus, our predicted market development and the great work we have done at KCL. I am also proud that creators and rights owners put their belief in us to take care of their timeless music and represent it well. We are excited to welcome KKR and Dundee Partners as Kobalt Music clients as the new owners of the Fund II works.”

Kobalt Capital CEO Johan Ahlström added: “This agreement represents a great outcome for our investors and, just as importantly, the ownership of these copyrights will be transferred seamlessly to new investors who share our commitment to putting creators first and being respectful stewards of great music.”

“Kobalt Music Publishing will continue to act as the core administrator and synch licensing partner for the Fund II portfolio,” said Kobalt CEO, Laurent Hubert. “We are excited to work with KKR, Dundee Partners and the many songwriters we have partnered with for years as we continue to deliver market leading service to all stakeholders to grow the reach of the music we all love.”

KKR is investing through its Dislocation Opportunities Fund and certain other private credit investment funds and vehicles.

Kobalt Capital was advised by Russell’s. Music strategy firm mtheory advised KKR and Dundee Partners on the transaction. Latham & Watkins LLP and FTI Consulting advised KKR and DLA Piper, Manatt, Phelps & Phillips, LLP, Jefferies LLC and Inkling Capital, LLC advised Dundee Partners.

Dundee Partners is the investment office of the Hendel family.

The Hendels have previously made investments in companies such as Partisan Records, Knitting Factory Entertainment, and Left Music Publishing.

The new KKR venture, Chord, is completely separate to an alliance that KKR announced earlier this year with BMG.

That partnership with BMG is said to have over a billion dollars to spend on music copyrights, but is yet to publicly announce a major acquisition.Music Business Worldwide