Hyper-Leveraged Hipgnosis Raises Another $63 Million

The ultra-aggressive shopping spree continues at Hipgnosis.

The London-based Hipgnosis has just received an additional £51.1 million ($63 million), a signal that investors are doubling-down on the fund’s aggressive asset acquisition strategy.

The publicly traded (on the London Stock Exchange, under symbol “SONG”) company pools its fund and puts them towards song rights — typically at extreme valuation multiples. Executives and investors involved believe that the royalties produced by these tracks will prove profitable in the long term, with the company focusing heavily on high-dollar, high-profile hit publishing catalogs.

It’s a big, highly-leveraged bet, with investors potentially scoring big on the bets — if all goes according to plan.  To date, Hipgnosis has raised more than $500 million.

Though Hipgnosis Songs Fund Limited (HSFL) is a relatively new entity, having debuted on the London Stock Exchange in July 2018, it’s already made several monster moves. The business has spent several hundreds of millions of dollars on song rights this year alone, with one flashy (and jaw-droppingly expensive) deal after another.

At the time of writing, Hipgnosis owned the master rights to more than 6,000 songs.

Both the number of owned songs and the amount of cash spent have grown during 2019. And to the surprise of some critics, Hipgnosis reported profits — not accounting for cash spent on new catalogs — of nearly nine million dollars.  These immediate profits are regarded as impressive, though the real play is very long-term.

Catalogs from hitmakers like The Chainsmokers, Benny Blanco, and Sam Hollander are part of the Hipgnosis banner.

Merck Mercuriadis, a longtime music industry professional and a former manager to Guns N’ Roses, Beyonce, and Elton John, founded Hipgnosis.

The Canadian executive is enjoying a nice uptick in stock price during the last few months, fueled by buoyant publishing valuations.  But 2018 was rough, with substantial financial losses accompanying the heady catalog bets.