Hipgnosis Dumps the Rights to 20,000 Songs At a Steep Discount, Taps New ‘Lead Adviser’ for Strategic Review

Hipgnosis songs fund
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Hipgnosis songs fund
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Photo Credit: Hipgnosis Songs Fund

Hipgnosis Songs Fund (HSF) has officially announced the sale of the rights behind approximately 20,000 songs – albeit at a 14.2 percent discount to their appraised valuation.

The publicly traded songs fund, which has grappled with ample investor criticism and operational hurdles in recent months, confirmed the $23.1 million IP selloff’s completion today. Announced in September alongside a much larger (and ultimately rejected) proposed sale, the comparatively small divestment consists of a portion of the song rights HSF obtained from Kobalt’s first fund back in November of 2020.

And while the selling company has opted not to publicly identify the buyer of the “non-core” assets at hand, reports have pointed to Kobalt itself (which is poised to drop north of $700 million on catalogs in the coming years) as the purchaser.

“They require time intensive, ongoing accounting and reporting obligations and do not all have perpetual ownership rights,” HSF maintained of the sold-off rights. “Their eventual sale was part of the Company’s acquisition strategy.”

Besides marking a 14.2 percent discount to the valuation issued by HSF’s catalog appraiser, as initially mentioned, the gross sale price is smaller than the “approximately $25 million” that HSF forecasted in September. All told, the business expects to pull in $22.6 million in net proceeds, using the capital to pay down some of its $700 million revolving credit facility.

Although the difference between the sale’s originally estimated value and the actual sale price is minor in the grand scheme of things, from investors’ perspective, the point appears to represent the newest in a long line of less-than-ideal developments for Hipgnosis Songs Fund.

Building upon the latter, when the market closed today, Hipgnosis stock was worth about 67 pence per share – or roughly 20 pence beneath the already-deflated value it had at 2023’s beginning. With veterans of the board behind Round Hill’s recently sold songs fund now part of HSF’s own board, the company is scheduled to deliver a roadmap for the future in April at the latest.

Said roadmap will result from a “strategic review” that’s been in motion since October. Today, in addition to detailing the $23.1 million sale, HSF said that it had tapped music-focused investment banking firm Shot Tower Capital “as lead adviser to conduct due diligence on the Company’s assets as part of its strategic review.”

According to its LinkedIn profile, Shot Tower has repped industry clients in transactions including Mojo Music’s sale to Concord and even Big Deal Music’s sale to HSF, to name a couple.

Meanwhile, London’s Singer Capital Markets is acting “as sole corporate broker and financial adviser,” per Hipgnosis Songs Fund, which is expected to post on Tuesday the 19th its financials for the six months ended September 30th.