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Music investor Hipgnosis will sell catalogs to boost shares

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(RockedBuzz via Reuters) – Music investor Hipgnosis Songs Fund will sell some of its catalogues, including songs by pop star Shakira and rapper Nelly, for $465 million to a private Blackstone vehicle to finance a share buyback, pay down debt and strengthen the share price. , the British company said Thursday.

The sale includes a portfolio of 29 music catalogs and a collection of non-core songs, the result of a partnership between its investment advisor and funds managed by US private equity group Blackstone, Hipgnosis said on Thursday.

Shares in the company, which also owns the rights to songs by the Red Hot Chilli Peppers, Neil Young and Blondie, rose as much as 6.5% to a near one-year high of 99 pence in morning trade.

The company said in July, alongside its annual results, that it was considering a “strategic sale of song catalogues” in an effort to narrow a sizable share price discount to its net asset value.

Founder Merck Mercuriadis is CEO and founder of investment advisor, Hipgnosis Song Management (HSM), and holds a minority stake in the acquirer, Hipgnosis Songs Capital.

In 2021, Blackstone Inc agreed to invest about $1 billion in partnership with HSM to buy music rights and record songs at a time when online streaming was gaining popularity and becoming more profitable.

Hipgnosis said proceeds from the sale will be used, among other things, for a stock buyback program of up to $180 million and for the repayment of a $250 million revolving credit facility.

“The board of directors and the investment advisor believe that, over the past 18 months, the company’s share price has not reflected the company’s fundamental value,” the Song investor said in a statement.

Shares in the FTSE mid-cap firm had slumped about 31% in 2022, but had posted gains in the first two quarters this year for year-to-date growth of about 9%, including Thursday’s trading.

The sale of the first portfolio, worth $440 million, includes a “go-shop” clause, meaning the board has the right to solicit alternative offers for a period of 40 days from its announcement.

As of March 31, the 29 catalogs represented 19% of the company’s portfolio by value.

Hipgnosis Songs Fund will retain ownership of seven of its ten largest catalogs, it added.

Last week, Alchemy Copyrights agreed to buy music copyright-focused investment firm Round Hill Music Royalty Fund for approximately $468.8 million.

(Reporting by Aby Jose Koilparambil and Yadarisa Shabong in Bengaluru; Editing by Janane Venkatraman and Elaine Hardcastle)