‘I was shocked the major music companies even let us in the business.’

Primary Wave CEO and co-founder, Larry Mestel

Is Larry Mestel about to raise a billion dollars? Don’t bet against it.

Mestel’s Primary Wave has raised over $800m in the past four years via two IP funds: a $300m fund in 2016, backed by Black Rock, and a further $500m-plus fund launched last year.

This money has been used by Primary Wave to acquire premium music assets that live up to the company’s billing as “the home of legends”.


You can listen to the MBW Podcast with Larry Mestel via SoundCloud above, or on Apple Podcasts, Google Podcasts, Spotify, Stitcher, iHeart etc. via this link.


As such, today Primary Wave owns substantial interests in the song catalogs of icons such as Ray Charles, Bob Marley, Whitney Houston, Burt Bacharach, Smokey Robinson and the Four Seasons.

Now, speaking on the MBW Podcast, Mestel reveals that Primary Wave is currently “finishing off” that $500m-plus second fund, while plotting an additional future raise that will be “significantly bigger” than those that have come before.

“We currently have close to $700 million of acquisitions in the pipeline.”

Larry Mestel, Primary Wave

Mestel’s remaining tight-lipped on precisely what structure, and what number, this might involve. But take it from us: don’t be shocked if Primary Wave raises a third fund in the months ahead that boasts a ten-figure (or near-ten-figure) acquisitive war chest.

Want further evidence?

“We [currently] have close to $700 million of acquisitions in the pipeline,” reveals Mestel, who has been CEO of Primary Wave since the New York-headquartered company was founded in 2006.


You can listen to the MBW Podcast with Larry Mestel via SoundCloud above, or on Apple Podcasts, Google Podcasts, Spotify, Stitcher, iHeart etc. via this link.


Looking to the future, one option Mestel isn’t ruling out is a potential future IPO on the stock exchange.

“It’s entirely possible that we will, in the future, raise money in the public market,” the Primary Wave co-founder tells MBW. “We’re discussing that and also other alternatives to to financing.”

“It’s entirely possible that we will, in the future, raise money in the public market.”

Larry Mestel, Primary Wave

Two modern music companies have already raised money on the stock exchange in order to buy copyrights, of course: Hipgnosis Songs Fund, which floated on the London Stock Exchange in 2018, and Round Hill, which is expected to float a $282m fund, also in London, this Friday (November 13).

Speaking about Hipgnosis’ particularly disruptive influence on the music publishing rights market, Mestel credits Merck Mercuriadis with having “stirred the barrel for everyone”.

“One thing Hipgnosis has done which is fantastic for us is they’ve gone in, thrown around some big prices, and got people excited about the potential to get a lot of money by selling their music assets,” says Mestel.


Despite this competitive landscape, Mestel argues that Primary Wave runs a truly unique strategy, both in the way it markets its artist catalogs, but also in the assets it chooses to buy – and those it chooses not to buy.

This is never better illustrated than when we ask Mestel what he thinks about acquisition multiples escalating ever-upwards in the music publishing world. Are prices starting to get silly?

Mestel remains unflustered. He suggests that the multiples one needs to pay to buy the kind of triple-A music assets that Primary Wave focuses on – from Bob Marley to Nirvana and Prince – have always carried an intimidating premium.

“It’s surprising to me that people are paying prices for catalogs that I would find sub-optimal for our platform.”

Larry Mestel, Primary Wave

“It’s not easy to find great assets,” he comments. “I think people that are raising money [today] have this pressure to buy, and because of that they’re buying assets that, frankly, we would never want to buy.”

He adds: “[M]ultiples that may look reasonably attractive on the way in are going to look horrible on the way out, when those cash flows are down. Those are assets we have no interest in.

“It’s surprising to me that people are paying prices for catalogs that I would find sub-optimal for our platform.”


By contrast, says Mestel, Primary Wave is judiciously sticking to its “legends and icons” strategy, which explains why it’s only got 16,000 copyrights in its portfolio to date, despite edging close to exhausting the $800m+ raised in its two prior funds.

In total, says Mestel, including co-investment vehicles and other interests outside the two funds, Primary Wave has “close to $1.5 billion of cash and assets under management” today.

And he’s keen to point out another difference to much of Primary Wave’s competition: despite this huge stack of cash and assets, says Mestel, his company currently has zero debt, having raised its funds by selling off equity.


You can listen to the MBW Podcast with Larry Mestel via SoundCloud above, or on Apple Podcasts, Google Podcasts, Spotify, Stitcher, iHeart etc. via this link.


In terms of Primary Wave’s ambitious marketing strategy, Mestel argues that the company doesn’t limit its role in the promotion of its artists to that of a traditional publisher.

“We have a very big synchronization team, and they’re very proactive in pitching, but we don’t view that as marketing,” he says. “Our competitors view sync licensing as marketing.”

For Mestel, better evidence of Primary Wave’s marketing clout comes with its major league commercial partnerships, such as a recent brand tie-up between Bob Marley and Oakley sunglasses, as well as the upcoming biographical movie about Whitney Houston’s life (written by Anthony McCarten who penned the script for Bohemian Rhapsody).

“One thing Hipgnosis has done which is fantastic for us is they’ve gone in, thrown around some big prices, and got people excited about the potential to get a lot of money by selling their music assets.”

Larry Mestel, Primary Wave

Primary Wave has been around – and backed by institutional investor money – since 2006, when Mestel struck a deal with Courtney Love to acquire 50% of Kurt Cobain’s song catalog, before buying interests in the works of John Lennon, Steven Tyler, Lamont Dozier and others.

In 2013, Mestel sold off Primary Wave’s catalog to BMG in a $150m deal, before starting again in 2016 with that $300m Black Rock-backed fund.

The future for Primary Wave certainly looks buoyant, with Mestel’s signature bound to appear on some giant-sized checks.


Mestel, a US record industry veteran with experience at the likes of Island Records, Arista and Virgin Records, is clearly enjoying the cut and thrust of the second stage of his career – as one of the leading lights of the Wall Street-backed music rights acquisition landscape.

Yet when he looks back over the past 15 years, he says he can’t believe music’s blockbuster industry players allowed said landscape to become a fruitful one for Primary Wave, Hipgnosis, Round Hill et al.

“I was frankly shocked that the majors even let me [and Primary Wave] in the business in 2006,” he says. “We bought Kurt Cobain’s music, Hall & Oates, Aerosmith… and every time [Primary Wave] closed on a spectacular deal, I wondered, ‘Why would the majors let us into this market?'”

“I was frankly shocked that the majors even let me in the business in 2006.”

Larry Mestel, Primary Wave

He adds: “Back in 2006, had the majors been aggressive, none of the companies that you’re talking about really would have ever been able to get into the business, including us.

“In 2006, we didn’t have the type of capital that we’re talking about today. And the the majors had enormous capital back then.”

As ever in this business, the trick is seeing the opportunity in front of you, and making sure you claim your territory.

Right now, Primary Wave and Larry Mestel are claiming their territory – with the kind of financial firepower needed to change the face of an entire industry.


You can listen to the MBW Podcast with Larry Mestel via SoundCloud above, or on Apple Podcasts, Google Podcasts, Spotify, Stitcher, iHeart etc. via this link.

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