Last Wednesday (October 6), two key observations were made on MBW’s Talking Trends podcast about music’s rampant catalog acquisitions space:
1) That private equity giant KKR is set to plough a truckload more money into music, via a new investing entity;
and
2) That MBW readers / listeners should “keep an eye” on a large collection of copyrights owned by a fund affiliated with Kobalt Capital, the investment management arm of Kobalt Music Group. We asserted that this fund’s copyright portfolio may be up for sale, and was likely to fetch “as much as $1 billion” from a willing buyer.
Just days later, these two forecasts are swiftly coalescing into one of the music business’s biggest news stories of the year.
A new report from Billboard correctly suggests that Kobalt is looking to sell its Kobalt Music Royalty Fund II for a price-tag in the region of $1 billion… and that the firm is in the final stages of a negotiation with a group of investors that includes KKR.
Kobalt Capital has managed two funds down the years.
The first and smaller of these two Kobalt funds owned a collection of copyrights that were sold to Hipgnosis Songs Fund for $323 million in November last year.
The second and larger of these funds, Kobalt Music Royalty Fund II, was established in 2017 with $600 million to spend, backed by the likes of UK pension scheme Railpen, along with other institutional investors.
Kobalt Music Royalty Fund II went on to buy the catalog of Matt Pincus’ SONGS Music Publishing for around $160 million in late 2017.
The acquired SONGS’ catalog included chart-topping hits by the likes of The Weeknd, Lorde, and Major Lazer.
Other acquisitions made by Kobalt Music Royalty Fund II include the David Hodges catalog (purchased in 2020), which contained No.1 hits songs written for the likes of Evanescence, Kelly Clarkson, and Christina Perri.
Billboard reports that Kobalt Music Royalty Fund II is also the owner of recordings and publishing catalogs built by US indie Glassnote. These were sold to the fund as part of a deal that saw Glassnote ink a global partnership with then-Kobalt-owned AWAL in late 2018.
Sony Music acquired AWAL alongside Kobalt Neighbouring Rights from Kobalt earlier this year in a $430 million acquisition. The UK’s Competition and Markets Authority (CMA) is currently investigating this buyout.
Perhaps the most significant news out of all of today’s revelations regards KKR, which appears to be building a new pot of money with which to buy its way further into the music industry.
KKR has already announced a completely separate acquisitive alliance with BMG this year, which is claimed to have at least $1 billion at its disposal to buy copyrights.
Now, MBW hears that KKR (and its associates) are looking to woo one of music’s most highly respected deal-makers to shape and lead its all-new investment play.
Watch this space.
MBW’s Talking Trends podcast will return with a new episode during the coming week.Music Business Worldwide