Hipgnosis Song Fund Selling 29 Catalogs to Hipgnosis Songs Capital

Hipgnosis' UK-listed Hipgnosis Songs Fund has issued a proposal to shareholders to sell two portions of its song catalog including a sale to private, Blackstone-backed Hipgnosis Songs Capital. The sale is reportedly an effort to increase stock price and pay off debt.

Wait, what? The proposed sale includes one package of assets consisting of 29 catalogs worth around $440 million that Hipgnosis Songs Capital has agreed to acquire, and a second package worth $25 million and including songs acquired from Kobalt in 2020. An external buyer is expected to be found for that package later this month.

The 29 catalogs in question include catalogs from Shakira, Barry Manilow, Nelly and more. Meetings for shareholders to vote on the proposed sale will be held on or before October 25. Proceeds from the potential sale will be put toward acquiring $180 million of Hipgnosis' own shares via buyback and paying down $250 million of debt currently drawn from Hipgnosis Songs Fund’s revolving credit facility.

What they're saying: Hipgnosis founder Merck Mercuriadis explained the motivations behind the planned sale in an internal memo. "As a result of global macroeconomic conditions the UK markets have been having a very difficult time and the majority of Investment Trusts are trading at a severe discount," he said. "This includes Hipgnosis Songs Fund (SONG) where despite having just had our best like-for-like results our shares have also been trading at a significant discount to the fundamental value of the Songs we have invested in."