The Blackstone Group is in serious discussions to inject more than $1 billion into a dedicated music copyright investment fund — with Hipgnosis Songs Fund founder Merck Mercuriadis potentially running the show. Here’s what we know so far.
Merck Mercuriadis has already blown the valuation of music copyrights sky-high at Hipgnosis Songs Fund — but it looks like there’s plenty more spending ahead. Late this (Thursday) afternoon, multiple industry sources tipped a pending deal between asset management giant Blackstone Inc. and Mercuriadis involving more than $1 billion in capital.
Neither Blackstone nor Mercuriadis are officially commenting at this stage, though the deal is understood to involve a fund separate from Hipgnosis Songs Fund. The distinct, $1 billion tranche would be overseen by Mercuriadis, with obvious scale between the two entities (not to mention a pool of knowledge). Separately, Bloomberg has reported that Blackstone may also become a passive investor in Hipgnosis itself.
In other words: lots of different variations and arrangements could emerge. Diving into more specifics, Bloomberg further notes that the newly-created fund will be “backed by about $1 billion in equity and debt from Blackstone’s tactical opportunities business.”
It should be noted that Blackstone isn’t new to the music industry. The company has also invested heavily in both SESAC and MNRK Music Group (previously known as eOne Music).
In the latest foray, a number of different variations could surface. There’s also the possibility that no deal is reached with Mercuriadis, though that seems unlikely at this stage.
Just recently, the music industry has welcomed mega-investments in music IP from financial players like KKR & Co. (which inked an investment joint venture with BMG), Apollo Global Management (which is investing up to $1 billion in Sherrese Clarke Soares’ HarbourView), and hedge funder Bill Ackman (who chaotically grabbed 10% of Universal Music Group from Vivendi just ahead of the major label’s Amsterdam IPO).
Indeed, the broader financial and Wall Street communities are suddenly ultra-enthusiastic about music copyrights. That type of investment rush isn’t unprecedented in the music business — back in the 90s, for example, massive revenues from CDs drew huge corporate buyouts that reshaped the music business forever. But the past few years have witnessed a surge in financial investment that was unthinkable just a decade ago — and something brand-new for most industry executives today.
Speaking of Universal Music Group, the mega-label’s successful IPO is undoubtedly stirring the recent surge in investment. That includes Blackstone’s potential play, though more reasoned voices are still wondering if Hipgnosis is paying far too much for control of high-profile song catalogs. That, coupled with easy access to capital and broader global economic concerns, make players like Hipgnosis potentially risky bets over the long term.
But hey — anyone selling their catalog for tens of millions — or even hundreds of millions of dollars — isn’t exactly complaining (for the most part).
More as this develops.