Hipgnosis Songs Fund buys huge catalog from Kobalt in $322.9m acquisition

Mariah Carey's All I Want For Christmas Is You is, once again, expected to break streaming records over the next couple of months. Only now Hipgnosis owns a slice of it.

Hipgnosis Songs Fund just did its biggest deal yet.

UK-listed Hipgnosis has today (November 2) confirmed that it has acquired over 33,000 songs / cuts in songs from Kobalt Music Copyrights S.à.r.l, for a total consideration of $322.9 million.

That’s the biggest full acquisition announced in music publishing since Concord acquired Imagem for over $550m in summer 2017, although that deal was for an entire music company, rather than a catalog of copyrights.

Hipgnosis’ Kobalt deal is bigger than more recent giant buyouts in music publishing including Round Hill Music’s ≈$245m acquisition of Carlin Music in early 2018.

Ascertaining precisely what’s in the Kobalt acquisition is obviously important.

Kobalt Capital Ltd operates separately to Kobalt Music Group Ltd, the home of Kobalt Music Publishing, Kobalt Neighbouring Rights and AWAL.

Kobalt Capital, in turn, manages the acquisition of copyrights on behalf of different funds, with each of these funds backed by institutional investors.

Hipgnosis has acquired the portfolio owned by Kobalt Capital’s first fund, which launched in 2011. It includes 42 catalogs written by more than 1,500 songwriters across a range of genres.

This portfolio generated $18m in 2019, up 6% YoY.

Hipgnosis has confirmed that the $322.9m it’s paid for the deal represents a 18.3X blended acquisition multiple on the catalog’s historic annual income.

The deal includes catalogs from hit writers such as Lindsey Buckingham, Steve Winwood, the B-52s, 50 Cent, Savan Kotecha, Skrillex, Nelly, Bonnie McKee, George Benson, Christina Perri, and Walter Afanasieff (including Afanasieff’s cut on Mariah Carey’s All I Want For Christmas Is You, which broke the all-time Spotify record for global 24 hours plays during the festive season last year).

The portfolio also includes 18,000 songs from the Nettwerk music publishing catalog, which Kobalt Capital acquired in 2016.

(For clarification: the Hipgnosis deal doesn’t include the SONGS publishing catalog, which Kobalt Capital acquired for ≈$160m in late 2017 using its second fund, through which it raised $600m.)

The list of hits covered by the first Kobalt Capital fund’s catalog, which is now owned by Hipgnosis, include:

  • Go Your Own Way and The Chain by Fleetwood Mac;
  • All I Want For Christmas Is You and One Sweet Day (featuring Boyz II Men) by Mariah Carey;
  • Bailando and Hero by Enrique Iglesias;
  • Higher Love by Steve Winwood;
  • Roar and Teenage Dream by Katy Perry;
  • Gimme Some Lovin’ by The Spencer Davis Group;
  • Can’t Find My Way Home by Blind Faith;
  • Never Give Up on a Good Thing by George Benson;
  • Bad to the Bone by George Thorogood;
  • Halo by Beyoncé;
  • Love Shack by the B-52s;
  • In Da Club by 50 Cent;
  • Sorry by Justin Bieber;
  • Don’t You Worry Child by Swedish House Mafia;
  • Hot In Herre by Nelly;
  • Sugar by Maroon 5;
  • Let It Go by Demi Lovato (from Disney’s Frozen soundtrack)

Following the acquisition, the Hipgnosis Songs Fund portfolio comprises 117 catalogs and 57,000 songs. The firm says its post-Kobalt-deal catalog carries an aggregate acquisition value of £1.18bn (approximately $1.5bn).

Merck Mercuriadis, Founder of Hipgnosis Songs Fund Limited and The Family (Music) Limited, said: “Hipgnosis has had a special relationship with Kobalt Music since its inception so it’s only natural that we would eventually make a deal like this for Kobalt Capital’s inaugural fund. Willard, Johan and Laurent have curated a wonderful portfolio of proven songs that is incomparable with almost anything other than the Hipgnosis Songs catalog which it complements beautifully. They are both small catalogs with songs of great cultural importance and an incredibly high degree of success within them from amongst the most important songwriters and artists in music’s rich history.

“I’m incredibly proud to welcome the iconic songs of Steve Winwood, Lindsey Buckingham, Bonnie McKee, Walter Afanasieff, George Benson, Enrique Iglesias, the B-52s, 50 Cent, Christina Perri, George Thorogood, Skrillex, Evan Bogart, J-Kash, Dierks Bentley, Savan Kotecha, LunchMoney Lewis, Eman Kyriakou, John Rich, Simon Neil / Biffy Clyro, Lateral, Mac Powell / Third Day, Mark Batson, David Gray, Tim James and Antonina Armato / Rock Mafia , Stefan Johnson and so many other incredible songwriters to the Hipgnosis Family. They’ve written iconic songs for Fleetwood Mac, Steve Winwood, Traffic, Blind Faith, Mariah Carey, Eminem, George Benson, B-52s, 50 Cent, Katy Perry, Beyoncé, One Direction, Big & Rich, Maroon 5, Dierks Bentley and so many more.

“These special songs that have had such extraordinary success have a lot more joy to bring the world and we look forward to working with these phenomenal creators in taking their songs to new heights while protecting their legacies. Thank you to Willard, Johan and Laurent and we look forward to working with Kobalt Music as our administrator on these important works.”

“Hipgnosis has had a special relationship with Kobalt Music since its inception so it’s only natural that we would eventually make a deal like this for Kobalt Capital’s inaugural fund.”

Merck Mercuriadis, Hipgnosis

Willard Ahdritz, Founder & Chairman of Kobalt and Chief Investment Officer of Kobalt Capital Limited, said: “When we started KCL in 2010, it was the world’s first regulated music royalties fund, offering clients our unique, transparent service and giving them comfort that we could provide a long-term commitment to administer their works if they wanted to sell their copyrights.

“Today, I am pleased to say that we have delivered on our promises to both our clients and our investors. The KCL advisory board has agreed to sell our first fund to Hipgnosis. The decision to sell to Merck and Hipgnosis was an easy one as we know them so well and the copyrights will be well taken care of under a long-term administration arrangement with Kobalt Music Group.”

“The decision to sell to Merck and Hipgnosis was an easy one as we know them so well and the copyrights will be well taken care of under a long-term administration arrangement with Kobalt Music Group.”

Willard Ahdritz, Kobalt

Laurent Hubert, Chief Executive Officer, Kobalt Music Group, said: “Since 2018, Hipgnosis has been a client and as Merck continues to grow his catalog of songs, one thing will remain constant: Kobalt will continue to deliver best-in-class publishing admin services.”

Johan Ahlstrom, Chief Executive Officer, Kobalt Capital Limited, said: “We are pleased to sell this select portfolio to Hipgnosis and deliver our clients a great return on their investment in music.

“As the industry continues to grow, KCL will continue to be active in acquisitions and advise across our funds for our clients and investors.”Music Business Worldwide

Related Posts