When the Hipgnosis Songs Fund was listed on the London Stock Exchange in July 2018 and entered the FTSE 250 Index in March 2020, by December 2021, its catalogue had grown to 65,000 songs worth $2.55 billion, writes David Little, a partner in our Corporate and Commercial Law team.
At launch, its shares were valued at 100p a share and it worked for a while, sadly the current state of play is a discordant noise on multiple fronts.
Whilst it might be one of the hippest shares to possess, you have to wonder whether Hipgnosis ever belonged on the public markets. While income from royalties sounds great in theory, the reality is 2023 appears to have been a musical mess.
Essentially, Hipgnosis invests across a broad range of music genres, catalogues and artists, picking songs that have outperformed over a period of time and those that were underused. Managers’ focus on song potential and performance optimisation feeds into legacies and superior royalty income.
However, this year the listed company’s dividends are suspended, and half the board was changed after shareholders rejected a deal to sell a fifth of its portfolio to Blackstone.
Today, the last day of the 2023 stock market as I write this, the shares sit at just 70p, which is a significant discount to its supposed value.
Evidently, the fund has delayed its half-year numbers, which is never a good look, and there are more rounds of the saga to follow next year according to Nils Pratley writing in the Guardian.
On the week before the Christmas break, Thursday 20 December, the company announced a change of auditor to KPMG Channel Islands Limited, from PwC Channel Islands. In fairness their press release states: “PwC CI, has deposited with the Company a statement confirming that there are no matters to be brought to the attention of the Company’s members or creditors.” So, nothing to see there.
Whilst I’ve never invested in Hipgnosis with so many famous artists’ royalties at its disposal, the fact the company isn’t flying high five years after launch is an enigma wrapped up in a conundrum. Hipgnosis was founded by Merck Mercuriadis, former manager of globally successful recording artists, such as Elton John, Guns N’ Roses, Morrissey, Iron Maiden and Beyoncé. It lists as just a few of the current artists whose music rights it owns as Red Hot Chili Peppers, Mark Ronson, Lindsey Buckingham & Christine McVie, Shakira, Neil Young, Blondie and Chrissy Hynde (and that was just on page one of the website).
Its Advisory Board of equally acclaimed music industry legends includes amongst others Nile Rodgers and Dave Stewart.
Which just goes to show talent in one sphere doesn’t guarantee success in another. Put another way, as my mother used to say: “Stick to your knitting.” Not bad life advice, really, and the basis of a very solid New Year’s resolution.
Happy New Year.
David Little is a Partner at Bishop & Sewell in our expert Corporate & Commercial team. If you would like to contact him, please quote Ref CB443 on either on either 07968 027343 / 020 7631 4141 or email company@bishopandsewell.co.uk.
The above is accurate as at 02 January 2024. The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.
