Done deal: Blackstone is the new owner of Hipgnosis Songs Fund, as investment giant’s bid wins shareholder approval

Credit: Clara Balzary/Warner Music Group/press
Hipgnosis Songs Fund's biggest-earning catalog is that of the Red Hot Chili Peppers (pictured), according to company documents

It’s official: Blackstone is about to become the new owner of Hipgnosis Songs Fund.

Blackstone’s USD $1.584 billion bid for the UK-listed music company yesterday (July 8) won overwhelming approval amongst HSF shareholders who voted at a Court Meeting and General Meeting.

The process saw 99.97% of the Scheme Shares voted by HSF shareholders approve the Blackstone deal.

Blackstone needed at least 75% of voting shares to get the deal over the line.

The breakdown of how many HSF shareholders voted for the sale to Blackstone vs. against (source: Hipgnosis Songs Fund)

The financial press last month speculated that certain hedge funds — who held enough HSF stock to prevent Blackstone from reaching the 75% threshold — might effectively ‘block’ the sale.

In the end, that didn’t come to pass.

According to the FT, hedge funds that owned shares in Hipgnosis Songs Fund included TIG, with a 14% stake; Glazer Capital, with around 8%Kryger Capital, with 6.6%; and Sand Grove Capital Management, with around 6%.

Blackstone’s USD $1.584 billion bid for HSF is for the company’s equity.

Due to Blackstone’s offer, with debt and other considerations taken into account, HSF’s enterprise value sits at around $2.20 billion. (As MBW has previously demonstrated, this valuation is higher than the cumulative price at which Hipgnosis founder Merck Mercuriadis acquired these assets for HSF when Right-To-Income is considered.)

Following its acquisition of HSF, Blackstone will own two Hipgnosis-branded song portfolios: Hipgnosis Songs Fund (HSF) plus Hipgnosis Songs Capital aka Hipgnosis Songs Assets (HSA).

The latter company (HSA) is the private owner of assets/interests associated with songwriters such as Leonard Cohen, Justin Timberlake, Justin Bieber, Nelly Furtado, and Kenny Chesney.

Both HSF and HSA continue to work closely with their investment adviser, Hipgnosis Song Management, which is run by CEO, Ben Katovsky.

Blackstone is understood to be the majority-owned of HSM.

Earlier this month, Hipgnosis Song Management announced that the company’s founder and Chairman, Merck Mercuriadis, was stepping away from the firm.

Mercuriadis said: “This is a timely opportunity for me to undertake a strategic shift of focus, and to spend more time advocating on behalf of songwriters to ensure that they are properly compensated for their work.”

Blackstone is acquiring Hipgnosis Songs Fund via Lyra Bidco Ltd, an entity that is fully financed by an equity investment from funds advised by affiliates of Blackstone.

In total, Blackstone says it has USD $1 trillion in assets under management today in all sectors, across investment vehicles focused on private equity, real estate, public debt and equity, life sciences, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds.

Hipgnosis Songs Fund has built a portfolio currently comprising 138 catalogs containing copyright and/or income streams from more than 40,000 songs.Music Business Worldwide