MBW: Hipgnosis Songs Fund is now worth $1.7bn... and is on course to generate $120m-plus this year
It's been a big week for stats regarding publicly-traded music companies. First came Spotify, which reached an all-time share price high of $325 on Wednesday lunchtime (ET), resulting in a market cap of just over $60 billion. Spotify's market cap valuation (currently at $59bn) has therefore more than doubled since the start of 2020.
Today (December 4) brings another set of blockbuster numbers from a public company: the Merck Mercuriadis-led rights house Hipgnosis Songs Fund, which floated on the London Stock Exchange in summer 2018.
The first pertains to Hipgnosis' revenues. Hipgnosis generated £50.04m (approx $67m) in gross revenue the six months to end of September, more than double the £22.64m it generated in the prior year's equivalent period.
Some £5.29m of that £50.04m was subsequently paid out in royalty costs during the six-month 2020 period, which – when interest is also considered – resulted in £44.80m (approximately $60m) in net revenues.
Some more intriguing stats for Hipgnosis watchers: largely due to the company's recent $323m acquisition of a Kobalt catalog of over 33,000 songs, Hipgnosis ended September with 57,836 songs in its portfolio.
Catalogs acquired by Hipgnosis during the pandemic period (i.e. during April-September this year) included music and/or revenue streams from the likes of Nikki Sixx, Chrissie Hynde, L.A Reid, RZA, Rick James and No ID.
The report confirms: "Since launch we have now acquired 117 Catalogues, comprising over 57,836 Songs, for an aggregate consideration of £1.18 billion, representing a blended acquisition multiple of 14.76x historic annual income."
One of Hipgnosis' biggest moves in the six months to end of September was its acquisition of US-based Big Deal Music Group. This not only brought Hipgnosis the rights to 4,400 songs, but also meant it could launch its own in-house publishing administrationin the States, all under the Hipgnosis Songs Group brand, led by Big Deal founder Kenny MacPherson.
Hipgnosis' report doesn't put a price on the Big Deal acquisition, but it does reveal: "The consideration for this acquisition was funded from the proceeds of Hipgnosis’ equity fundraise in July 2020 [in addition to] the issue of 17,609,304 new Ordinary Shares (“Consideration Shares”) issued at a price of 120.65 pence per Ordinary Share."
Hipgnosis' report further clarifies: "6,248,351 of [these] Consideration Shares were subject to lock up restrictions to 1 October 2020, with 10,123,219 Consideration Shares subject to lock up restrictions to 1 April 2021."
In a section of the interimreport praising the team behind Hipgnosis, Merck Mercuriadis says: "During the period we have transformed our Song Management expertise, notably making three appointments of the highest calibre at the Investment Adviser in Ted Cockle, Amy Thomson and Nick Jarjour who have joined as President, Chief Catalogue Officer and Global Head of Song Management respectively.
"Further to this, our acquisition of Big Deal Music, now re-branded Hipgnosis Songs Group, in Los Angeles, gives us Kenny MacPherson, CEO – who is one of the most respected song men in our industry over the last 35 years as well as Co-Presidents Jamie Cerreta and Casey Robison, Dave Ayers EVP in New York and Pete Robinson SVP in Nashville.