Beyoncé and Blondie track fund Hipgnosis delays outcomes amid valuation issues

Beyoncé and Blondie track fund Hipgnosis delays outcomes amid valuation issues

The woes of Hipgnosis Songs Fund, which owns the streaming rights to artists starting from Beyoncé to Neil Younger, have deepened, because it delayed the publication of its half-year outcomes on the final minute.

Hipgnosis stated it was suspending its outcomes as a result of the corporate valuation by its unbiased valuer was “materially larger” than the valuation implied by proposed and up to date transactions within the sector, specifically its current sale of track rights at a steep low cost.

The fund final week bought 20,000 “non-core” songs for $23.1m (£18.4m), at a 14% low cost to their earlier valuation.

Tuesday’s assertion additionally referred to a proposed sale of property for $417.5m at a 24% low cost to their earlier valuation, when Hipgnosis failed in its try to promote nearly a fifth of its again catalogue to the non-public fairness group Blackstone.

Blackstone had beforehand invested in Hipgnosis Track Administration, the entity that decides on investments within the fund. Shareholders within the Hipgnosis fund voted towards the deal in late October.

The board sought recommendation from Hipgnosis Track Administration on its opinion on the unbiased valuer’s valuation.

“Hipgnosis Track Administration finally offered an opinion, which was closely caveated, such that the board has issues as to the valuation of the corporate’s property in its interim outcomes,” the fund stated. It expects to publish its outcomes for the six months to 30 September by 31 December.

Increased rates of interest have plunged the fund into turmoil, making the prospect of future revenue from streaming royalties much less enticing to traders and forcing adjustments to how the fund calculates the worth of future revenues.

The corporate cancelled dividend funds to shareholders in October, saying that adjustments to US royalties had diminished its revenue. It stated paying a dividend would pressure it to breach its covenants – agreements with lenders.

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Hipgnosis was based in 2018 by Merck Mercuriadis, who believed that on-line streaming had made the rights to long-lasting music hits a pretty funding proposition.

Mercuriadis beforehand managed artists together with Elton John, Weapons N’ Roses, Morrissey and Iron Maiden, and used his contacts to snap up the rights to track catalogues in a sequence of offers. He constructed up a portfolio of just about 61,000 songs value $2.2bn.

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