Blackstone has taken an enormous step into the world of music rights as valuations increase, asserting a tie-up with Hipgnosis Track Administration, the corporate run by music mogul Merck Mercuriadis.
The personal fairness group will put $1bn into a brand new fund run by HSM that can purchase music rights, catalogues and royalties.
It is going to additionally take a stake within the music publishing firm itself, which individually runs the London-listed Hipgnosis Songs Fund and has been on a fast-paced shopping for spree, snapping up songs by artists akin to Blondie and Neil Younger.
Blackstone’s new fund comes as personal fairness teams are doubling down on music, with a surge in streaming having elevated the worth of older songs.
“This new partnership with Blackstone will ship monetary energy to spend money on confirmed songs in addition to develop our music administration workforce,” mentioned Mercuriadis, who’s Elton John’s former supervisor.
He added that his firm had “firmly established songs as an asset class”.
Blackstone declined to say whether or not it’s taking a majority or minority stake in HSM, or at what valuation it’s shopping for in.
Rival personal fairness agency Apollo final week mentioned it was launching a brand new funding firm, HarbourView, with $1bn to spend on music rights, whereas KKR in March teamed up with BMG, one of many world’s largest music corporations, to focus on massive acquisitions of labels and catalogues.
Hipgnosis Songs Fund is the biggest UK-listed investor in music catalogues and royalties, with gross property of about $2.2bn. Below the Blackstone deal, it would have the precise to co-invest in music catalogues alongside the brand new fund.
Blackstone’s funding within the new car shall be in fairness and debt, and can come from its tactical alternatives fund.
This 12 months, analysts at Stifel raised issues about how Hipgnosis values the songs it has acquired, as a result of there’s little monetary info supplied when it strikes offers.
Numis has additionally mentioned Hipgnosis’s financials are troublesome to evaluate, given the ignorance accessible, however the firm has since responded by rising the extent of data it releases about its purchases.
Qasim Abbas, a senior managing director in Blackstone’s tactical alternatives unit, mentioned the personal fairness group noticed “long-term, sustainable worth” in what he known as “artistic content material”.
Shares in Hipgnosis Songs Fund are up 17 per cent because it listed in 2018, and rose 2 per cent within the wake of the Blackstone announcement.