Shares in Hipgnosis Songs Fund hit a record low yesterday (March 4), following the UK music investor undergoing a series of financial troubles last year.
The FTSE 250 firm said that a review had estimated the fair value of its catalogue at between £1.8billion and just over £2billion (via Sky News), with the brand owning the rights to music by Shakira, Ed Sheeran, Red Hot Chili Peppers, Neil Young and more.
It also comes after the value of the portfolio dropped, and the company reportedly halted investor payouts “for the foreseeable future”.
The report – carried out by its lead adviser Shot Tower – showed that the value had declined by at least a fifth on that reported by Hipgnosis in September 2023.
The music fund – set up and launched by Chic legend Nile Rodgers and Merck Mercuriadis (former manager of Elton John and Beyoncé) – was mired by financial troubles last year. These included concerns around valuations, board and legal battles and a shareholder revolt against a catalogue sale deal.
Last December, Hipgnosis was set to share its half-year results, but said it was delaying the publication of the results due to concerns that music catalogues and songs are not being valued high enough.
The pause was set to last between mid-December and the end of March, and yesterday (March 4) it was confirmed that the pause would continue.
As highlighted by Sky News, approximately 65 per cent of Hipgnosis’s royalties come as a result of passive publishing, performance and recorded music income streams. However, that is set to decline by around 45 per cent, as additional control rights return to the company upon the expiration of pre-acquisition publishing agreements.
It was also reported that shares were trading at 14 per cent less after the update, now down to 56p.
The stock hitting a record low also comes after reports emerged that the brand spent $1billion (£720m) on acquiring artists’ back catalogues in 2021.
These included purchasing the catalogues of artists including Lindsey Buckingham and Blondie, as well as Jimmy Iovine’s worldwide producer royalties and half of Neil Young’s songs in a deal estimated at $150million (£110million).
Shakira also sold all 145 of her songs to Hipgnosis, including ‘Hips Don’t Lie’, ‘She Wolf’ and ‘Whenever, Wherever’, all part of the deal.
At the time, Mercuriadis said that cultural importance is key when it comes to the artists whose back catalogues they have acquired.
“So, with over £1bn invested, we only own 57,000 songs. But 10,000 of them are Top 10 songs, almost 3,000 of them are No.1 songs. So it’s a very small catalogue, relative to Universal, Warner or Sony. But the ratio of success within that catalogue is very high, there are very few songs that are not successes.”
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