Round Hill raises another $291m in third royalty fund (and has already spent most of it)

Round Hill says it acquired hits performed from Craig David earlier by year via its Royalty Fund III. (Pictured: David's manager Colin Lester, Round Hill's Robin Godfrey-Cass, Craig David)

Round Hill Music has announced that it has closed its third private fund, Round Hill Music Royalty Fund III, with total equity commitments of $291m.

Of that $291m, says Round Hill, it’s already spent more than $200m on catalogs including hit songs performed by The Goo Goo Dolls, Matchbox Twenty, Rob Thomas, Black Sabbath, Dropkick Murphys, Daughtry, Craig David, Kiss, Limp Bizkit, Blues Traveler, Bruno Mars, Skid Row, Bachman Turner Overdrive, Night Ranger and more.

The Royalty Fund III is separate to a new royalty fund (Round Hill Music Royalty Fund Ltd) that Round Hill floated on the London Stock Exchange last week, which raised $282m ahead of its IPO.

That $282m was $93m lower than the $375m Round Hill was hoping to raise.

Round Hill’s initial intention was to spend the majority of this $375m IPO target to acquire a portfolio of copyrights owned by its Round Hill Music Royalty Fund I, which originally launched in the US in 2012.

That catalog was recently independently valued at $363m, and contains songs made famous by the Beatles, Celine Dion, Louis Armstrong and the Rolling Stones.

Obviously enough, the $282m raised via Round Hill’s IPO last week won’t be enough to acquire Fund I’s copyrights at this $363m valuation.

Round Hill does has a plan for this shortfall, however.

In a pre-IPO prospectus published in October, Round Hill wrote: “In the event that the Net Proceeds of the [IPO] are lower than [our] target amount of US$375 million, the Company intends to deploy substantially all of such Net Proceeds in acquiring a proportionate part of the Pipeline Investments at the same valuation.”

In other words, we might not buy some, rather than all, of the copyrights owned by Fund I.

Could Round Hill’s Fund III now step in to acquire the remaining Fund I assets? We shall see.

The company says that its investors in Fund III include “leading endowments, foundations, and pension funds, while also adding select new US institutional investors”.

Since inception, Round Hill Music, across all funds, has acquired rights to over 128,000 songs.

It’s possibly useful at this point to break down Round Hill’s four funds to date by chronology.

  • As mentioned, in 2012, Round Hill launched its Music Royalty Fund I, which eventually closed with $202m raised. (It then deployed that $202m buying catalogs which an independent valuer now suggests have since shot up in value, and are worth $363m.)
  • Then, in December 2017, it raised $263m via its Music Royalty Fund II, money it used to complete its historic acquisition of the Carlin catalog for around $245m.
  • Today (November 18), we learn that Music Royalty Fund III has raised $291m.
  • And last week, Round Hill floated an additional fund on the LSE, raising $282m.

Across those four funds, that adds up to over a billion dollars of spending power ($1.045bn).

Josh Gruss, Chief Executive Officer of Round Hill Music, said of the Fund III raise: “We are grateful for the continued confidence and strong support we received for Fund III from a diverse group of new and existing high caliber investors.

“Round Hill Music has continued to distinguish itself as a leader in the music royalty space by acquiring blue chip songs with enduring long-term popularity. We are pleased to serve as the partner of choice for songwriters and other third parties, attracting a talented team with a deep knowledge of the investment and music industries.

“Against the backdrop of the global pandemic and the structural shift of streaming and synchronization, the music royalty asset class has gathered pace and continues to show strong growth, while also proving resilient in difficult economic environments.

“As experienced investors in music rights, our objective continues to be to provide investors with regular and growing income and capital returns from investment primarily in high quality, music intellectual property.”

“Against the backdrop of the global pandemic and the structural shift of streaming and synchronization, the music royalty asset class has gathered pace and continues to show strong growth, while also proving resilient in difficult economic environments.”

Josh Gruss, Round Hill

Neil Gillis, Round Hill Music’s President, added: “We were able to raise our largest fund to date amid the COVID-19 pandemic due to continuing favorable market conditions, including improved copyright law, a surge in streaming subscription services, and increased synchronization opportunities.

“For more than a decade, Round Hill Music has generated strong risk-adjusted returns for our investors and we look forward to continued innovation as we seek to capitalize on great tailwinds for our business.”Music Business Worldwide

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