Hipgnosis is selling a lot more shares to raise a lot more money to buy a lot more music

Merck Mercuriadis, CEO of Hipgnosis Songs Fund

Hipgnosis Songs Fund is raising big money again.

According to a prospectus issued to the markets today (January 21) and reviewed by MBW, the UK-listed company has proposed the issuance of up to 1.5 billion shares – across an initial issue of ordinary shares, and then further placing programs of new ordinary shares and/or C class shares – over the course of the next 12 months.

At the current price of Hipgnosis’ ordinary shares (GBP £1.21 per share), a 1.5 billion share issuance would raise over USD $2 billion.

In the first instance, says Hipgnosis, it will issue a maximum of 500 million ordinary shares at a price of £1.21 each, with potential gross proceeds of up to £605 million (around $830 million).

It hasn’t announced a specific target for the amount of money it wishes to raise with that initial issuance, which is an unusual – but not unprecedented – approach from the company.

Today’s news comes four months after Hipgnosis raised £190m (around $242m) via the issue of a bunch of new ordinary shares in its company in September 2020.

In addition, earlier this month, Hipgnosis secured access to an additional USD $200m via a new agreement with the lenders behind its Revolving Credit Facility.

Whatever amount Hipgnosis raises this time, it seems likely to weigh in at a nine-figure sum. So what does it need the extra money for?

Its prospectus today reads that Hipgnosis is currently eyeing “pipeline catalogs [with] a combined purchase price of over £1 billion”.

Hipgnosis says its investment adviser has “identified these catalogs from “well-known songwriters, recording artists and producers”, but it hasn’t yet entered into any binding agreements to buy them.

This certainly isn’t the first time we’ve seen the Merck Mercuriadis-founded company mention £1 billion in potential pipeline investments. But it tells us that Hipgnosis still sees plenty of acquisitive opportunity in the music rights marketplace – and is hungry for more.

In 2021 alone, Hipgnosis has announced the acquisition of music rights from the likes of Neil Young and Fleetwood Mac’s Lindsey Buckingham.

In addition, it’s bought collections of producer royalty points from Jimmy Iovine and – as announced today – Metallica collaborator Bob Rock.

The latest Hipgnosis prospectus also reveals some interesting information about the firm’s institutional shareholder list as of yesterday (January 20).

Hipgnosis’ largest institutional investor currently is Newton Investment Management, with a 9.47% stake.

This is followed by Aviva Investors, with 7.2%, then Investec Wealth & Investment (RS) with 6.65%, and Schroder Investment Management, with 4.76%.Music Business Worldwide