Hipgnosis Songs has said it failed to attract a better offer for a collection of song rights than the $440 million that a fund run by its founder is willing to pay.
Investors had criticised the plan by the troubled music royalties business to sell about a fifth of its portfolio at a steep discount to a fund owned by Blackstone, the American private equity group, and run by Merck Mercuriadis, also a founder of Hipgnosis.
Ahead of a crucial vote on the future of the business, Hipgnosis told the market that a marketing process had not produced a “superior offer” to the one from Blackstone for rights to songs by artists including Nelly and Shakira, Chrissie Hynde and Jay-Z.
Hipgnosis buys the rights to songs from artists and then manages their use, cashing in on royalties as they are played on streaming services, or used in films and advertisements. Founded by Mercuriadis, 60, it floated in 2018.
Investors including Investec, Aviva, BlackRock and the Church of England’s fund eventually provided more than £1 billion to buy the rights to tens of thousands of songs. But amid concerns from shareholders about the valuation of its assets and poor corporate governance, it axed its dividend last week and announced a strategic review.
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Hipgnosis has said a valuation of its portfolio had “materially reduced” its assessment of how much it can expect to receive from royalty payments in light of the decision by the board of copyright royalty judges last year, and it wants to sell the songs to Blackstone to return money to shareholders.
Investors expressed concerns about the price and the involvement of Mercuriadis in both funds. Yesterday Hipgnosis said it had been in contact with 17 parties to find an alternative buyer but that no “binding bid” was received.
Tomorrow it faces a vote at its annual meeting on whether to accept the Blackstone deal and whether to keep the fund going. Shares in the fund fell 2¼p, or 2.8 per cent, to 73¼p.
