No doubt about it – this is blockbuster news.
Blackstone, one of the world’s most powerful financial players, has confirmed that it is investing around $1 billion to acquire music rights via a partnership with Merck Mercuriadis.
MBW has confirmed that this money will be poured into a new private fund, Hipgnosis Songs Capital.
Hipgnosis Songs Capital is a separate entity to the Mercuriadis-led Hipgnosis Songs Fund (SONG), which trades on the London Stock Exchange and has invested around $2 billion in music rights to date.
In addition, Blackstone is investing an undisclosed amount of money in Mercuriadis’ investment management / advisory company, formerly known as The Family (Music) Ltd, and from today known as Hipgnosis Song Management (HSM).
Hipgnosis Song Management will therefore become the exclusive investment management partner for both Hipgnosis Songs Fund and the Blackstone-backed Hipgnosis Songs Capital.
Blackstone’s billion dollar-investment is a game-changer for the music industry… but don’t expect its bankrolling to stop there. The company is ready to invest more vast sums in music rights – perhaps multiple billons more – via Hipgnosis Songs Capital in the years ahead.
Qasim Abbas, Senior Managing Director, Blackstone Tactical Opportunities, has led the new partnership deal with Mercuriadis.
“What we’re looking to do – as a starting point, really – is acquire about a billion dollars worth of catalogs. [But] that’s just the start – Our ambition is much more substantial.”
Qasim Abbas, Blackstone
Speaking to MBW in an exclusive interview, Abbas told us: “At this point in time what we’re looking to do – as a starting point, really – is acquire about a billion dollars [worth] of catalogs. I would emphasize that’s just the start. Our ambition is much more substantial than that.”
And we certainly shouldn’t discount the additional chunk of change that Blackstone is pumping into Mercuriadis’ investment management firm, Hipgnosis Song Management.
Abbas didn’t confirm a figure for this investment, but spoke of a grand-scale ambition for HSM, which – as well as seeking out catalogs to buy – is responsible for maximizing the commercial returns of all music rights under the Hipgnosis name, whether via royalties, synch licensing, or other activity.
“We’re going to invest substantial money in Hipgnosis Song Management in order to scale up and build its various capabilities to the next [level],” said Abbas. “The shared vision is to create the best-in-class platform, of substantial scale, and of a skill-set that is unrivalled in the market.”
Blackstone says that the plan for its investment in Hipgnosis Song Management will include the “development of new song management expertise, data science capabilities and technology solutions” which, it notes, “should allow HSM to further enhance the value of the rights it purchases, working in close collaboration with songwriters, artists and producers”.
“This new partnership with Blackstone will deliver financial strength to invest in proven songs as well as grow our song management team and bring additional sophistication to HSM.”
Merck Mercuriadis, Hipgnosis
The publicly-traded Hipgnosis Songs Fund, we’re told, will have the right to co-invest in future catalog acquisitions alongside the new Blackstone–HSM partnership.
Merck Mercuriadis, CEO of Hipgnosis Song Management, said: “Hipgnosis Song Management has firmly established songs as an asset class. This new partnership with Blackstone will deliver financial strength to invest in proven songs as well as grow our song management team and bring additional sophistication to HSM, enabling us to create greater value to our stakeholders including our songwriters and shareholders in [Hipgnosis Songs Fund].
“Given the strength of our pipeline, we see the initial commitment as just the start of a long-term partnership between Blackstone and Hipgnosis that will also include co-investment with SONG.”
Qasim Abbas further commented: “This partnership underscores the long term, sustainable value we see in creative content across the wider entertainment industry, building on Merck’s vision and dynamism. The music industry has been at the forefront of the fast-growing streaming economy and is unlocking new ways of consuming content.
“We look forward to working with Merck and his team to continue their exciting journey and safeguard the legacy of the songwriters that entrust us with their content.”
Andrew Sutch, Chairman of Hipgnosis Songs Fund, said: “Our investment adviser, Hipgnosis Song Management’s, new partnership with Blackstone highlights how successfully Merck has established songs and music rights as an asset class since founding and listing SONG three years ago.
“This new partnership will provide new co-investment opportunities for SONG, and we expect that continued investment in Hipgnosis Song Management will enhance returns for our investors.”
Blackstone was advised on the transaction by Goldman Sachs, FTI, Kirkland & Ellis and Deloitte. Hipgnosis Song Management was advised by RBC, Capstan Capital Partners and Stephenson Harwood.
Look out later today on MBW for our full interview with Qasim Abbas and Merck Mercuriadis on the new partnership between Hipgnosis and Blackstone.
The music catalog investment space has had a particularly busy week.
In addition to today’s bombshell Hipgnosis/Blackstone news, we’ve learned that KKR is reportedly in advanced negotiations to buy a catalog from Kobalt Capital for around $1 billion.
Elsewhere, New York-based Apollo Global Management is investing up to $1 billion in HarbourView – a new music rights and media content-focused firm run by Sherrese Clarke Soares, the former head of Tempo Music Investments.
And in the past few days, both BMG (for a stake in the Tina Turner’s rights) and Primary Wave (for a stake in Bing Crosby’s rights) have both announced deals each worth more than $50 million.Music Business Worldwide